Citizens Business Conditions Index reaches highest US level, Vermont lags

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Citizens Business Conditions Index reaches highest US level, Vermont lags

Fri, 07/23/2021 - 11:17am -- tim

Vermont Business Magazine Citizens, with branches across Vermont, announced Thursday that the strength of the economic recovery pushed this past quarter’s national Citizens Business Conditions Index (CBCI) to 57, its highest reading in three years and up five points compared to last year. A reading above 50 is considered expansionary. Citizens also noted that inflation has returned as the economy jolted back into action as the pandemic has subsided.

While Vermont’s index is a solid 53.7, this is a drop from the previous quarter (the highest on record) and from the same time last year. See data below.

“What we see at this stage of the recovery is strong momentum – the payoff of vaccinations, of the ongoing power of fiscal and monetary support, and of the growing readiness to return to normal activities,” said Tony Bedikian, head of global markets at Citizens. “Inflation is worth watching and the verdict is still out on whether the inflation we have seen is transitory or beginning to surge. We are closely monitoring supply chain and labor data as well as the impacts of pent-up post-pandemic demand. Barring exogenous factors, the U.S. economy seems poised to continue its steady recovery through the second half of 2021.”

The Index is derived from a number of underlying components, many of which improved during the second quarter.

  • The Institute for Supply Management (ISM) Manufacturing and Non-Manufacturing Indexes both rose for the quarter, helping to lift the Citizens Index.
  • Initial jobless claims dropped in another positive sign while new-business applications were flat.
  • Utilities and telecommunications companies led a strong quarter overall for businesses, according to the bank’s proprietary corporate activity data.

The Index draws from public information and proprietary corporate data to establish a unique view of business conditions across the country. An index value greater than 50 indicates expansion and points to positive business activity for the next quarter.


Growth was the key theme of the quarter. Both manufacturing and non-manufacturing sectors posted historically high readings on the Institute of Supply Management (ISM) indexes, well into expansionary territory. Consumer spending continued at a high pace, fueled by multiple rounds of stimulus checks as well as by surplus savings that many households accrued over a year of lockdowns and restrictions.

As GDP growth estimates were revised higher over the period, earnings forecasts trended up as well. Energy companies saw the highest boost as oil and other commodity prices were stronger, but most sectors enjoyed brightening outlooks.

Against this backdrop, employment measures were good, though not quite as strong as expected. Job openings hovered at record levels through the spring and early summer months, and many businesses reported labor shortages. For a variety of reasons – lack of childcare, continued pandemic fears or access to extended employment benefits – the labor pool remained significantly below its pre-pandemic level. Still, employment trends were positive overall, contributing to the rise in the CBCI for the quarter.


Inflation readings were another key topic of discussion. The headline CPI (Consumer Price Index), which includes food and energy prices, came in high through the quarter, finishing with a year-over-year measure of 5.4% in June.

Base effects were one driver of current inflation numbers, as the year-over-year comparison to June 2020 caught a window when prices suffered the greatest decline amid pandemic lockdowns and job losses.

Fed policymakers have maintained that reopening inflation is most likely a transitory effect, with supply shortages, shipping bottlenecks and demand surges pushing short-term price increases. Indeed, vehicle rentals and airfares were among the top price increases, clearly driven by the consumer return to non-pandemic behaviors. Meanwhile, many pricing components, including food at home and housing, rose at a much slower pace.

Interest rate markets, known for being a sensitive barometer for the inflation outlook, do not indicate high inflation expectations in future periods, suggesting that investors broadly agree with the Fed’s viewpoint that the current inflation trends will be transitory.


Within our proprietary business-activity data, the Midwest again showed the strongest momentum for the quarter. The Mid-Atlantic and Northeast posted lower regional readings, but only by a small margin. All three regions showed positive growth for the period. Likewise, sector strength was broad-based. Among our proprietary business-activity data, utilities and telecommunications sectors showed the highest level of growth, but nearly all sectors trended up from already-positive first-quarter levels. Governmentsector activity was the one exception, cooling slightly from 1Q levels. However, even government-sector data remained at an expansionary level.


The rebound in the U.S. is clearly widespread and durable at this point in the pandemic, with the U.S. economy leading the recovery globally. Key threats to the domestic growth trajectory include the continued risk of resurging infection levels – especially in regions where inoculation rates have been much lower – and the possibility of persistent inflation. In the second quarter, both threats remained in check enough to enable widespread growth in business activity.

For more information about this past quarter’s Index, click here.

Footprint refers to Citizens' sphere of influence.

About Citizens Financial Group, Inc.

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $185.1 billion in assets as of June 30, 2021. Headquartered in Providence, Rhode Island, Citizens offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. Citizens helps its customers reach their potential by listening to them and by understanding their needs in order to offer tailored advice, ideas and solutions. In Consumer Banking, Citizens provides an integrated experience that includes mobile and online banking, a 24/7 customer contact center and the convenience of approximately 3,000 ATMs and approximately 1,000 branches in 11 states in the New England, Mid-Atlantic and Midwest regions. Consumer Banking products and services include a full range of banking, lending, savings, wealth management and small business offerings. In Commercial Banking, Citizens offers a broad complement of financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange, interest rate and commodity risk management solutions, as well as loan syndication, corporate finance, merger and acquisition, and debt and equity capital markets capabilities. More information is available at or For more information, please visit the Citizens website.

Source: PROVIDENCE, R.I. – Citizens 7.23.2021