Philly Fed data shows 24 states with declining or stagnant economies in August

Is it because of the bitter debt ceiling debate that spooked markets, consumers, and companies with money to invest?

Or is it because of more fundamental economic problems?

Are we now rebounding in September? Or will the sovereign debt crisis in Europe overwhelm the prospects for a renewed recovery?

Lots of questions, and the best-case scenario answers still aren’t very good.

Each month the Philadelphia Federal Reserve Bank publishes a coincident index of state-level data estimating economic activity. Here’s the straightforward methodology:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

And here’s the August map of the 3 month average, which isn’t quite as bad as the data for only August: