U.S. Regional Recession Status

Moody's Economy.com classifies the current economic status of U.S. states and metro areas using four categories: "In Recession", "At Risk", "Recovery", or "Expansion". The evaluation of recession status is based on a six month test of either contraction or expansion. The six month test compares the six-month moving average in the current period to the six-month moving average in the period six months ago.

For a geography to be considered "In Recession", the six month test must show it to be in contraction. Furthermore, the coincident indicator cannot have yet reached a trough. If a trough has been reached, the economy has shifted from "In Recession" to "Recovery".

If the six month test shows the geography to be in expansion, then its status is either "Expansion" or "At Risk". The economy is only in "Expansion" when the coincident indicator has yet to reach a peak. If it appears that a local peak may have been reached and the coincident indicator is increasing but at a decreasing rate, then the economy is placed "At Risk".

Given the current slowing in growth driven by waning housing markets and weakness in manufacturing, it helps to have a gauge for where these fault lines are developing as there are varying levels of vulnerability across the country. This metric of recession status is just one of many ways of seeing where these problems lie.