The Index of Economic Activity is an economic barometer that tracks the current state of the economy in Humboldt County on a monthly basis beginning with January of 1994. It is not meant to forecast future activity, but to provide a comprehensive gauge of recent activity. Because of resource limitations the Index is only able to include the participation of a subset of retailers, manufacturers, and area hotels and motels. Consequently the Index cannot perfectly track the Humboldt County economy. Instead, the Index should be seen as an indicator of current economic patterns in Humboldt County.
The Index of Economic Activity tracks six sectors of the Humboldt county economy. They are employment, retail sales, (lumber) manufacturing, electricity consumption, hospitality (hotel/motel occupancy rates), and home sales. The data come from various public and private sources. The manufacturing sector is tracked thanks to the ongoing participation of major Humboldt County lumber companies. The retail sector is tracked thanks to the ongoing participation by a number of different Humboldt County retailers. Likewise the hospitality sector is tracked thanks to the ongoing participation of a number of different Humboldt County hotels and motels. The sector data are seasonally adjusted and given appropriate weights to form a Composite Index.
In addition to producing the monthly Index of Economic Acitivity, in our Index report we have also been tracking aspects of the economy that are are considered to be leading economic indicators (help-wanted ads, new applications for unemployment insurance, lumber orders, and building permits). Thus if the number of claims for unemployment insurance drop, or if the volume of lumber orders, help-wanted ads, or building permits rise, then this may indicate increased economic activity in future months. Finally, we also track some economic data of general interest. These include 30-year fixed-rate mortage interest rates, the prime rate, the median price of homes sold in Humboldt county, and the county unemployment rate.
The index tracks inflation-adjusted economic output in the County. When overall output increases, whether it is due to increased tourism or new business formation, the Index should pick this up. We do not attempt to track every economic activity, but a representative sample. Hence, the Index will not capture all activity in the County, but should show the major trends.
There are two indices plotted on the line chart, the seasonally adjusted and the non-seasonally adjusted series. The seasonally adjusted series eliminates variation in the economic data due to the month of the year. For example, January is typically a period of low activity because the lumber industry is in low production mode and tourism is bottoming out. The seasonally adjusted series corrects for these effects. When the seasonally adjusted Index declines in January, it is because the decline in economic activity is even more than normal. The non-seasonally adjusted series does not adjust seasonal effects. It shows what is actually happening in a given month. In Humboldt County, for example, economic activity seems to peak in July and then decline until January when it begins to peak again. This is not surprising in an economy with large natural resources and tourism sectors.
If someone is interested in knowing how the economy is performing relative to normal, the appropriate series to look at is the seasonally adjusted series. The percent change should be an indication as to the percent change in the quantity of economic activity in the County.
The Index is published monthly on the Internet at: http://www.humboldt.edu/~economic/ieahc.shtml. The Index is currently prepared by HSU Economics Professor Steve Hackett, who serves as Executive Director, and HSU student John Manning, who serves as Managing Director. Financial support is currently provided by Coast Central Credit Union, Humboldt Bank, Six Rivers Bank, and Security National Servicing Corp.
Community members have complained for years about the lack of good up-to-date information on the economy. The Index of Economic Activity fills the information gap. The Index is produced as a service, and represents a unique student/faculty, university/community collaboration.