By Simon Medcalfe, contributing writer
The Augusta Leading Economic Index (Augusta LEI) is a monthly composite index that combines several national, regional and local indicators into a single variable. Leading indexes combine variables that change before business cycle variables such as employment changes. Leading indexes may, therefore, indicate changes that could occur in the economy. Leading indexes are not forecasts or predictions about the future, but may signify future economic activity.
The Augusta LEI may, therefore, provide local decision makers with timely information about future business cycle patterns in the Augusta area. The Augusta LEI uses economic indicators for the Augusta Metropolitan Statistical Area (MSA), which includes six counties (i.e., Burke, Columbia, McDuffie, and Richmond counties in Georgia, and Aiken and Edgefield counties in South Carolina).
The index also includes regional and national indicators to reflect that national trends affect the local economy. The index is constructed in the same way that the Conference Board constructs the Leading Economic Index for the United States which declined 0.2 percent in June.
In June, the Augusta LEI decreased 0.9 percent from May. Caution should be taken in interpreting too much into a single month’s change. Indeed, the index is up 9.1 percent from a year ago. However, four variables declined from May to June with real deposits increasing due to falling prices. While falling prices for individuals increases their spending power, deflation can be problematic for the macro economy as people put off spending expecting prices to be even lower in the future.
In other news released this week by the Bureau of Economic Analysis the Augusta MSA saw personal income rise by 1.3 percent in 2009. The national average was a decline of 1.8 percent. On a per capita basis the increase was 0.4 percent for Augusta and a 2.8 percent decrease nationally. This puts the Augusta MSA in the top 20 percent of MSAs for income growth last year.
Aug 31, 2010
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