Dr. Ed’s
Economic
Indicators

GDP SHADOW INDEX

Release Date: Mid to Late Month
Release Coverage: Monthly
Released By: The Federal Reserve Bank of Philadelphia
Official Release: Market Rates

The GDP shadow index is commonly referred to as the Philly Fed U.S. coincident index. The coincident index combines four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average).

WHAT DR. ED SAYS:

The GDP shadow index gives a good picture of the overall economy. When calculated, it is adjusted to historical GDP growth and importantly is diffused using CPI. Being calculated in a different manner than GDP, it gives us an idea of the associations among the four variables used to calculate an additional inflationary variable. Interestingly, all are closely tied to employment and salary or wages. This is meaningful to those who are watching the overall economic growth while comparing it to other specific indicators, especially those that contribute to this indicator's calculation.

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