Weekly Economic Trends and Indicators
Understanding economic data in real-time can be like looking at a half-finished jigsaw puzzle where you do not know what the final picture is supposed to be. You think you know what the picture is, but there are large holes where you cannot see how one part of the image relates to another. Similarly, economic data comes to us, not as a complete picture, but in pieces over time. When government agencies issue initial estimates of prices, unemployment, GDP, etc., they necessarily take some early information and use statistical models to fill in the rest of the picture.
In times of relative economic stability, the accuracy of these models is well-understood. However, during times of economic change, extrapolating from early data is less accurate. Today’s labor market has been transformed in ways we do not fully understand by the COVID-19 recession, AI adoption, and other factors. For this reason, most analysts expect payroll employment for 2024-25 to be revised downward by several hundred thousand as additional information is incorporated into the data.
Regional data is also prone to this difficulty as early estimates of jobs and GDP are often revised. This was the case this year as the Bureau of Economic Analysis recently released county-level GDP for 2024 and revisions for 2020-2023. According to this first release of 2024 data, inflation-adjusted GDP increased by a very respectable 1.6% in the six-county Quad Cities combined statistical area. However, 2023 growth was revised from +1.3% to -0.1%. Revisions to prior years were much smaller in magnitude.
What does this mean for us now? While the health of a local economy is better measured in real-time by data on jobs, business expansion, building permits, and the like, GDP is an important indicator of the overall long-term trends that we are experiencing. GDP can also give clues about where the momentum is in the economy going forward.
The story of the long-term trend for the Quad Cities is well-known to readers of this blog. The COVID-19 contraction was less severe here compared to other parts of the country, and the recovery and expansion that followed has been less robust. Job growth was strong early in the expansion but began to falter in 2024 as high interest rates and declining exports affected the region. Given the size of the downward revision to 2023 GDP and the job losses in 2024, a downward revision to this initial estimate is not out of the question.
Still, 2025 ended on a positive note for the U.S. economy, and the local job market appears to be in the process of stabilizing. When we get our first look at 2025 regional GDP later this year, growth will probably be positive—with a slow start to the year helped by strong nationwide consumption spending, lower interest rates, and a weaker dollar, in the last few months of the year.
As we look forward to the rest of this year, continued labor market stability is the key for the local economy. With the national labor market under pressure, it may be the case that the Quad Cities simply experienced that weakness earlier than the rest of the country. Unfortunately, like the incomplete jigsaw puzzle, the full picture will require more pieces (of data) coming together.
Next week: National employment report for January
