Comerica Bank's California Index Up Again

Rhea-AI Summary

Comerica Bank's California Economic Activity Index rose to 97.7 in September, an 8% increase from its cyclical low. This marks the index's third consecutive gain, influenced by positive trends in nonfarm employment, housing starts, and hotel occupancy. However, concerns arise as California faces a surge in COVID-19 cases, potentially leading to stricter restrictions that could affect economic recovery. The index averaged 124.4 points in 2019, indicating a broader economic impact. As of September 30, 2020, Comerica reported total assets of $83.6 billion.

Positive

• California Economic Activity Index increased by 8% from cyclical low.
• Third consecutive gain in the index due to positive trends in employment and housing starts.

Negative

• Surge in COVID-19 cases risks economic recovery in California.
• Stricter stay-at-home orders may pressure non-essential businesses, affecting economic activity.

DALLAS, Dec. 1, 2020 /PRNewswire/ -- Comerica Bank's California Economic Activity Index increased in September to a level of 97.7. September's reading is 8 percent above the cyclical low of 90.2. The index averaged 124.4 points in 2019, 0.5 points above the average for all of 2018. August's index reading was 95.4.

Our California Economic Activity Index improved again in September, posting its third consecutive gain. The index components were mostly positive as nonfarm employment, unemployment insurance claims (inverted), housing starts, house prices, state total trade, the Dow Jones Technology Index and hotel occupancy rose in September. Industrial electricity demand was the only index component to decrease for the month. Our California Index reflects the reopening of the state's economy in September. However, in this unsettled economic environment, 6-8 weeks makes a big difference. We still expect to see gains in the index in October and November, but the narrative around the economic recovery is beginning to pivot heading into year-end. California's major cities are implementing stricter social mitigation efforts as a new surge in COVID-19 cases risks overwhelming the state's healthcare system. Even stricter stay-at-home orders could be implemented in counties that fall under the highest risk rating in the coming weeks. Currently, 51 of California's 58 counties fall under this designation. We will likely see additional pressure on non-essential indoor businesses in retail and hospitality related industries this fall and winter. The state is still dealing with high levels of unemployment. Emergency federal jobless benefits are set to runout at the end of December. The late-2020 drag on income will be a headwind for California household spending heading into early 2021.

The California Economic Activity Index consists of eight variables, as follows: nonfarm payroll employment, continuing claims for unemployment insurance, housing starts, house price index, industrial electricity sales, total trade, technology stock index and hotel occupancy. All data are seasonally adjusted. Nominal values have been converted to constant dollar values. Index levels are expressed in terms of three-month moving averages.

Comerica Incorporated (NYSE: CMA) is a financial services company headquartered in Dallas, Texas, and strategically aligned by three business segments: The Commercial Bank, The Retail Bank, and Wealth Management. Comerica focuses on relationships, and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico. Comerica reported total assets of $83.6 billion as of Sept. 30, 2020.  

To subscribe to our publications or for questions, contact us at ComericaEcon@comerica.com. Archives are available at http://www.comerica.com/insights. Follow us on Twitter: @Comerica_Econ.

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SOURCE Comerica Bank

FAQ

What is Comerica's California Economic Activity Index for September 2020?

The California Economic Activity Index increased to 97.7 in September 2020.

How does the September 2020 index compare to previous months?

The index showed a rise from 95.4 in August 2020, marking its third consecutive gain.

What are the implications of COVID-19 on California's economy according to the report?

The report warns that a new surge in COVID-19 cases may lead to stricter restrictions, impacting economic recovery.

What were Comerica's total assets as of September 30, 2020?

Comerica reported total assets of $83.6 billion as of September 30, 2020.

What factors are contributing to the increase in the California Economic Activity Index?

Positive factors include increases in nonfarm employment, housing starts, and hotel occupancy.