I’m afraid of heights. Anytime I’m in an elevated space that leaves me exposed—no surrounding walls or barriers—my heart starts to race. I know it’s not rational, but I can’t think my way out of that feeling. Panic sets in. I passed on the Cliffs of Moher hike because of this fear, and though I’ve been to New York City several times, I’ve never taken the elevator to the top of the Empire State Building.
Today when I saw the Empire State Index report, my heart leapt to my throat. No, I wasn’t imagining standing on the top of that iconic building staring down (far down) at the street below. Instead, I was gripped by another fear.
What is the Empire State Index ? Well, its full name is Empire State Manufacturing Survey, and it has nothing to do with the famous building. Instead, it’s all about the State of New York, you know, the Empire State.
On the first day of each month, a survey is sent to 200 manufacturing executives in New York. They are asked questions about the state (small “s”) of their business. The pool of participants represents a broad group of industries and is looked upon as a good measure of economic activity. Because the executives are asked about current and future activity, it measures expectations about the future.
It is produced and monitored by the New York Federal Reserve Bank. That makes it a government-collected piece of data. But one has to ask, “Why only New York?” While other cities are important to the overall economy, New York still holds sway. The New York Fed is the most powerful of the member banks simply because of the amount of business coming from that region.
So why did my fear reflex kick into gear when this data was released? Like my heart when I even think of the top of the Empire State Building, the index dropped like a stone this month. In fact, it fell 26.4 points and landed in negative territory at -8.6. Economists expected it to drop but to stay at a decent positive 10.
Manufacturing has been weak. Some of that is related to our trade policy, but much is related to a global slowdown. The auto industry is a big driver of manufacturing, and it is expected to be weak this year. Things are definitely slowing.
Could this be the beginning of a recession? Possibly. Certainly, we are due for a downturn after 10 years of expansion. But is this the heart-stopping kind like my acrophobia? No, don’t think so. So far, this looks like the typical ebb and flow of the business cycle. Yes, there will be some pain along the way, but unless there are hidden bubbles, we should weather it just fine.