State Economic Watch

According to the most recent Federal Reserve Bank of Kansas City’s Services Survey , service sector activity in the Tenth Federal Reserve District increased modestly in May. The top line services composite index (SA) increased to 10 in May from 3 in April and 15 in March, while the  general revenue/sales index rose to 12 from 6. The employee count and hours worked indexes moved modestly positive after falling into negative territory in April. Despite this improvement in current conditions, the six-month expectations indexes generally ticked lower, with the forward composite index falling to 11 from 22, and the revenue/sales expectations index declining to 16 in May from 34 in April. The employment expectations indexes were mixed with employee count moving slightly lower and hours worked moving slightly higher m/mn. However, the part-time employment expectations index dropped to -8 from 10. Capex expectations increased to 17 from 1, a level more consistent with the prints for this i...

The US Bureau of Labor Statistics released its report on 2025 state productivity this week. The BLS calculated output and hours worked to determine the labor productivity of each state. By this methodology, the states that saw increases in output together with decreases in hours worked had the highest levels of productivity. According to the BLS calculations, the District of Columbia experienced the highest y/y growth in productivity in 2025 at 5.2%, followed by Arizona (4.4%), and California (4.2%). Alaska had the highest level of output growth at 3.8%, but its 6.2% increase in hours worked caused its productivity to decline 2.3% y/y, making it second only to Idaho (-2.5%) in the level of productivity decline in 2025. In all, eight states posted decreases in productivity in the year. Oregon saw the largest y/y reduction in hours worked and, together with its output increase of 1.2%, put its productivity growth just behind the leaders and even with Massachusetts at 3.7% The report als...

The Federal Reserve Bank of Philadelphia’s State Coincident Indexes improved notably in April, as the three-month diffusion index rose to its highest level since January 2025. The index increased 14 points m/m to 90 in April from a revised 76 in March, with only two states, Connecticut and Hawaii, posting index declines. Washington State’s index remained flat over the three-month period, but the indexes of all other states improved. West Virginia, North Dakota, and Idaho posted the strongest three-month index gains in the month. The exhibit below is reproduced from the press release.

In the current edition of Chicago Fed Insights , economists at the Chicago Fed take a deep dive into the demographics of population aging in the US and the economic and fiscal implications of elder care. In the first part of this three-part series, the authors look at the three types of living arrangements for older adults, community based, assisted living, and nursing home, and point out that the utilization of each varies with age and demographic group. In addition to the direct effects of aging on the labor force and on public services, the article points out the second order effect of caregiving, noting that as more of the elderly age in community settings, caregiving often falls on family members which “can reduce labor force attachment, lower work hours, limit job mobility, and depress lifetime earnings”. One of the more interesting statistics discussed in the piece is the elderly dependency ratio, or the number of people over 65 divided by the number 15-64. The authors note that...

The results of the First Quarter 2026 Ag Credit Survey from the Federal Reserve Bank of Minneapolis are sobering. According to the Survey, farm income fell in 1Q2026 with 76% of respondents in the Ninth Federal Reserve District reporting y/y decreases in the quarter. However in Minnesota, that percentage jumps to 90%, the highest of the states in the District. Additionally, 70% of Minnesota respondents reported decreases in farm capital spending and 65% reported a decline the rate of loan repayments in 1Q2026 compared to 1Q2025. Minnesota also reportedly led the country in the amount of farm bankruptcy filings in the first quarter as federal trade policies and the Iran conflict have kept grain prices low and farm operating costs high. The below exhibit is reproduced from a report by the American Farm Bureau Federation, and illustrates the state-by-state Chapter 12 farm bankruptcy filings in calendar 2025.    

The May Texas Manufacturing Outlook Survey from the Federal Reserve Bank of Dallas indicates positive but slower growth in the state’s manufacturing sector. The top line production index fell almost ten points but remained in positive territory at +9.4, close to its historical average. Similarly, the new orders, capacity utilization and shipments indexes all fell m/m but remained positive. The growth rate of orders index however, fell into negative territory. Employment measures remained flat. Despite the erosion in current measures in May, Texas manufacturers remain optimistic, with the production, capacity utilization, new orders, and shipments six-month forward expectations indexes all remaining in solidly positive territory.