Nine States Projected to Contract in 2020: More on the Way


Leading indicators at the state level project nine states will contract within the next six months.

State Leading Indicators

An analysis of State Leading Indicators by the Philadelphia Fed suggests nine states will be in contraction within six months.

The Federal Reserve Bank of Philadelphia has released the leading indexes for the 50 states for November 2019. The indexes are a six-month forecast of the state coincident indexes (also released by the Bank). Forty-one state coincident indexes are projected to grow over the next six months, and nine are expected to decrease. For comparison purposes, the Philadelphia Fed has also developed a similar leading index for its U.S. coincident index, which is projected to grow 1.4 percent over the next six months.

Philadelphia Fed Region

  • Pennsylvania: The leading index for Pennsylvania was -0.5 in November. The state’s coincident index decreased, and the index of delivery times from the Institute for Supply Management’s manufacturing survey rose in November. Building permits decreased, and initial unemployment insurance claims decreased in the same period. Overall, Pennsylvania’s leading index for November suggests contraction in the state’s economy in the second quarter of 2020.
  • New Jersey: The leading index for New Jersey was -0.2 in November. The state’s coincident index decreased, and the index of delivery times from the Institute for Supply Management’s manufacturing survey increased in November. Building permits rose, and initial unemployment insurance claims decreased in the same period. Overall, New Jersey’s leading index for November suggests contraction in the state’s economy in the second quarter of 2020.
  • Delaware: The leading index for Delaware was -0.7 in November. The state’s coincident index decreased, and building permits decreased in November. Additionally, the index of delivery times from the Institute for Supply Management’s manufacturing survey increased in November, while initial unemployment claims decreased. Overall, Delaware’s leading index for November suggests contraction in the state’s economy in the second quarter of 2020.

Those three states are in the Philadelphia Fed region. The Fed provided no details on the other states.

State Leading Index Map

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Bloomberg reports Nine States Face Economic Contraction, Most Since 2009 Crisis

State Projections

  1. West Virginia: -4.5% to -1.5%
  2. Pennsylvania: -1.5% to -0.2%
  3. New Jersey: -1.5% to -0.2%
  4. Vermont: -1.5% to -0.2%
  5. Delaware: -1.5% to -0.2%
  6. Oklahoma: -1.5% to -0.2%
  7. Montana: -1.5% to -0.2%
  8. Iowa: -0.2% to 0.2%
  9. Kentucky: -0.2% to 0.2%
  10. Connecticut: -0.2% to 0.2

The Bloomberg article noted that Iowa and New Hampshire are expected to see marginal growth over the next few months. Thus, New Hampshire must be at the bottom end of its range.

Rising Initial Claims

I picked this idea up from Daniele DiMartino Booth.

Booth notes that "In December, nearly 2/3rds of states had rising initial claims YoY."

Election Significance

I took a lot of flack from Trump supporters over my December 30 post Trump Will Easily Be Defeated in 2020, Perhaps a Landslide

But I stand by it. One of my reasons was the economy. Specifically, I stated "Trump's trade policy has been a disaster to both farmers and the steel industry. Farming woes are well understood, but steel is another matter."

States Trump Won

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Trump barely won many of those states.

Pennsylvania is a state Trump desperately needs to hold on to. This is what the map looks like flipping only Pennsylvania, Wisconsin, and Michigan.

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People generally chimed in "that can't happen".

One person said "I suck at politics, and another said it was too early to say anything".

Well, I called the Brexit election better than anyone, and in 2008, I called 49 of 50 states (Missouri showed me up) in February, well before Obama won the nomination.

The 2008 election was easy because all I did was project Obama would win every state remotely in play. I was positive a huge recession was underway.

Recession Card

There may not be a recession in 2020, and I certainly have a couple of bad calls there. But there does not have to be.

Steel Futures

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How well are Trump's steel revival promises going to play out in Pennsylvania, Ohio, and Michigan?

Might not just a few farmers in those states be more than a little pissed off at Trump's inane tariffs?

Trump Popularity

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Allegedly Great Economy

Despite Trump's proclamations of best economy in history and a stock market that was at an all time high yesterday, Trump has never polled over 50% nationwide.

Manufacturing ISM Down 5th Month to Lowest Since June 2009

Earlier today I posted Manufacturing ISM Down 5th Month to Lowest Since June 2009.

My opening lead was "Unlike the dip in 2015, this isn't energy related."

Now nine states are faltering.

Some of the Philly Fed analysis was based on ISM. Today's ISM data is not yet reflected in the Philly Fed analysis.

Reader Sechel made this mostly-accurate assessment to my ISM post: "Trump campaigned on reviving manufacturing, not services. It doesn't feel like he's been very successful. Tariffs and quotas are not a strategy."

Tariffs and quotas were indeed a strategy, just a very poor one.

Bullying Iraq and Iran

Yesterday, I reported: Trump Fires Missiles at Iraq Kills Iranian Revolutionary Guard Leader

Trump bullying Iraq and Iran is sure to piss off moderates. And there are more US troops in the Mideast than ever.

More broken promises? You bet.

Appealing to the warmonger base is not going to get one more vote for Trump. But it may get the independents to decide "anybody is better than Trump", well, perhaps anybody but Warren.

Trump barely beat Hillary Clinton, arguably the worst candidate in decades, perhaps ever.

Referendum on Corbyn, Referendum on Trump

The British election was easy to call. I was one of few confidently predicting a solid to blowout win for Boris Johnson.

Why: The British election morphed into a referendum on Jeremy Corbyn, a Marxist.

Trump managed to do two things in 2016: appeal to the rust belt and turn the election into a referendum on Hillary.

Unless the Democrats are foolish enough to nominate another lightning rod, this election is likely to morph into a referendum on Trump.

Yet, the US economy is clearly sputtering and Trump's trade policy has been a disaster in states he barely won and needs to win again.

Good luck with that.

Mike "Mish" Shedlock

Comments (24)
No. 1-13

It is important to note that the 250,000 census bureau hires are supporting the employment numbers that would be sagging without them, and that the vast bulk of those hires will be filing for unemployment in front of the November elections, for week in and week out prior to the elections there will be increasing numbers in the unemployment data leading up to the vote. It will have a psychological impact.


It is too early for me to put my head on chopping block and predict the outcome of the 2020 election (not that it will make the slightest bit of difference) when the Democrats haven't decided which idiot they're going to nominate. If there's a depression, Trump will likely try and blame it on others. The more important question will whether or not there is a war on Iran.


Pipe fitter (build oil refineries, chemical plants, steel mills, etc.) family members who live in NW Indiana and Chicago report that this winter has been the first time in thirty years without lay-offs. That’s fact for them, but they are also Democrats. It’ll be interesting to see if Trump gets the majority of industrial construction votes.


I'm confident the Dems will make a poor choice in their primary, and that again, primary sour grapes will result in many Dems staying home in Nov 2020, no matter how much they hate Trump.

I'm also confident Trump will continue to lose support.

It's a race to be the least biggest loser.

You're underestimating the Dem's ability to lose that race to Trump. And Trump is still the FU candidate for those who hate both Parties and all of DC (that may no longer make sense, yet, it's true).


Agree with Mish - to an extent. Trump is vulnerable. The question is - "Who is the candidate that will beat him?" IMHO, the field of candidates the Democrats have out there all have MAJOR shortcomings. Most are downright un-electable and unfit to run against a sitting President who is not presiding over an economy in recession.


2nd set of Iranian assassinations in Iraq reported. If this continues to escalate into November, a lot of Trump supporters will probably stay home while the communists get out the vote.


Hillary is back stage and ready for her "surprise" entry.


Jan. 3, 2020, at 6:00 AM Our Poll Finds A Majority Of Americans Think The Evidence Supports Trump’s Removal

After the House of Representatives voted to impeach President Trump on Dec. 18, the president’s fate is in the Senate’s hands. The process for the trial still isn’t clear, but there are signs that it will likely be smoother sailing for the president going forward: Republican Senate Majority Leader Mitch McConnell has said he will coordinate with White House counsel, and there’s no indication that the Senate is anywhere near the 67 votes needed to remove Trump from office. And according to our impeachment and removal polling trackers, there isn’t broad public support for that either — just 47 percent of Americans favor removing Trump.

But in the latest installment of our survey with Ipsos, where we use Ipsos’s KnowledgePanel to poll the same group of respondents every two weeks, a majority (57 percent) of Americans said they think Trump committed an impeachable offense. Fifty-two percent said they think Trump’s actions regarding Ukraine or his refusal to cooperate with the impeachment inquiry constitute enough evidence to remove him from office. ...

Duncan Burns
Duncan Burns

52% of Americans own stocks, funds, 401k's etc. We know that is not the economy, but some think it is, or they think that's because of Trump, it's great. Does it even matter? Both Party's abuse us, no matter who is in power, and the worst policies are usually in a bi-partisan manner (i.e. Bailouts). 70% of the population don't understand 4th Grade mathematics, so trying to have a discussion is pointless. It's all projection, via the media, and folks eat it up. No matter how big the lie, even when it harms them, they think it's good for them. Trump may still win because like Hillary, the alternative is actually worse.


This chart of states expected to contract in 6 months is a great leading indicator. It would have been nice to compare predictions with actual outcomes as verification of the prediction model.


I'm not convinced the economy hurts Trump. Even though it's rough in the heartland, that process began long before he came into office. MAGA is gone, but "lesser evilism" is still very much alive.

Prior to this week I thought a new war (especially a huge one with Iran) would hurt him but now I've seen otherwise. It's important to remember that a lot of Trump supporters were former Bush/Cheney disciples. They flocked to the neocon agenda once and it appears they can do so again as long as the right guy is in charge. They flirted with the "end the wars" shtick but apparently attacking new countries is way more fun than peace. Maybe it makes them feel better about their less-than-great lives here in the US, or maybe they just want to take their anger out on someone else. Either way, war has enjoyed enduring popularity in America for a reason.

Global Economics