Regional coincident economic indexes: The New England states' 'state of the economy'

The aggregate US economy exhibits fluctuations that are referred to as business cycles. Peaks, which mark the beginning of recessions, and troughs, which mark the end of recessions and the start of economic recoveries, constitute business cycle turning points, The National Bureau of Economic Research monitors the US economy and establishes the dates of peaks and troughs. But at present, there is no business cycle established for any of the New England states. One statistical measure that summarizes the state of the economy and possesses turning points that are nearly coincident with those of the national business cycles is known as the coincident index of economic activities. A coincident index developed specifically for a state would establish an appropriate means of indicating the state's aggregate economy and calibrating its business cycles.;This research develops coincident economic indexes by extending the earlier research of Clayton-Matthews, Kodrzycki, and Swaine. The methodology for the construction of the indexes is that of dynamic factoring whereas the unobserved variable, the "state of the economy," becomes the coincident index,;The first objective is to derive indexes for the six New England states, the New England region, the state of New York, and the United States. The second objective is to generate a simple methodology for dating the state business cycles for each of the states. A byproduct of the index construction is the identification of the economic shocks that drive the economy of each state. The final objective is to analyze the shocks to determine whether the changes in economies are related to each other and whether such changes are concurrent with, lead, or lag each other.