Using the Richmond Fed Manufacturing Survey to Gauge National and Regional Economic Conditions

57 Pages Posted: 25 Feb 2019 Last revised: 29 Apr 2020

See all articles by Nika Lazaryan

Nika Lazaryan

Federal Reserve Banks - Federal Reserve Bank of Richmond

Santiago M. Pinto

Research Economist; West Virginia University - Department of Economics; Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: 2017

Abstract

We evaluate the Federal Reserve Bank of Richmond (FRBR) manufacturing survey and assess its contribution to explaining national and regional economic conditions. Specifically, we examine the predictive accuracy of a variety of static and dynamic models. The models include the composite diffusion index reported by the FRBR and other information readily available from the FRBR surveys but not currently employed in the calculation of the composite index. The paper concludes, first, that the diffusion indices currently reported perform reasonably well at explaining both the national and the regional economy. Second, it is possible to improve the predictive power of the indices by considering models that account for a richer dynamic structure given the high persistence of the series under study. Third, the predictive accuracy of the current FRBR composite index can be improved further by adjusting the weights used in its calculation and by including other diffusion indices. Also, the composite indices that track the national and regional economy would not necessarily be the same, and the paper provides a few insights on what those diffusion indices would look like.

Keywords: manufacturing survey, economic conditions

Suggested Citation

Lazaryan, Nika and Pinto, Santiago M., Using the Richmond Fed Manufacturing Survey to Gauge National and Regional Economic Conditions (2017). Economic Quarterly, Issue Q1-Q4, pp. 81-137, 2017, Available at SSRN: https://ssrn.com/abstract=3339390

Nika Lazaryan (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

Santiago M. Pinto

Research Economist ( email )

P.O. Box 27622
Richmond, VA 23261
United States

West Virginia University - Department of Economics ( email )

College of Business and Economics
1601 University Ave., Room #412
Morgantown, WV 26506-6025
United States
(304) 293-7871 (Phone)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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