The Texas index of leading economic indicators: a revision and further evaluation

In this article, Keith R. Phillips revises the Texas index of leading economic indicators that he introduced two years ago. He does so in response to recent structural changes in the state economy and the availability of new data. The Federal Reserve Bank of Dallas has produced the Texas leading index monthly since July 1988. ; Using a newly developed technique for evaluating leading indexes, Phillips finds that the revised Texas leading index has performed well in predicting movements in the Texas economy since 1981. He also finds that monthly revisions in the leading index are generally small and that preliminary estimates are good predictors of final values. Together, these results indicate that the new Texas leading index can be a useful tool in improving forecasts of the state's dynamic economy.