Four of the six indicators of the St. Cloud Area Leading Economic Indicators index (LEI) were positive in the quarter of May to July 2024. The future outlook of business owners in the St. Cloud Quarterly Business Survey contributed positively, as did St. Cloud 11 Stock Price Index.
The decline in professional and business services employment was a negative this quarter. Three other items — initial claims. new business incorporations and current conditions — were small contributors this quarter.
FCC photo illustration
We base LEI on a model for data we observe regularly over time known as “classical decomposition.” Any time series can be broken down or decomposed into components that include a trend and a seasonal factor, plus some other cycle and a residual. LEI tries to improve a naïve guess of the cycle based on the time series we use to measure “the state of the St. Cloud economy,” which is the level of private-sector employment.
Our “meter man” has been at 4 in the last two quarters, indicating that employment should be growing somewhat above what the economy would grow at if we were in a neutral market. As seen in the graph below, LEI forecasts private employment on a seasonally adjusted basis to be 96,441. (Though see the footnote below.) Looking only at the employment data, however, forecasts a peak December and a decline to 94,517. July 2024 seasonally adjusted private employment was 93,752 by comparison. The difference between the forecast without and with LEI is statistically significant.
Neither forecasts a recession yet, and LEI says a recession would not happen in the next six months. Compared to the national forecasts concerning Federal Reserve rate cuts, we see a clear path for growth through the rest of 2024.
A footnote: The state does not provide seasonally adjusted data for St. Cloud: we calculate seasonal patterns ourselves. We calculate than on an average July there will be 725 more jobs than a “normal” month and an average January has 2,268 fewer jobs than normal. That is, there is a normal swing in employment between July and January of more than 3,000 jobs. The largest of these changes are because of hiring for the holiday seasons that occur in the fourth quarter of a year. We forecast therefore that the number the state will report next year for St. Cloud private employment would be 94,174, not 96.441.
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