The Economic Stress Index is at 2.89 in July 2018, down from 3.16 in June and 3.45 in May. Last year July the Index was at 5.08. The lower the index, the better the economy is. The historical annual average is 7.5 (years 1973 through 2016).
Underemployment (the U6) averaged 7.60 the last three months ending with the June jobs report released early July, and Gross Domestic Product (“The Economy”) was 2.84% higher the last quarter compared to the same quarter a year earlier. Household Income, per Sentier Research, was 1.87% higher the last three months (April-May-June) compared to the same three months a year earlier.
The July 2018 Index add up as follows:
7.60 Underemployment is the base number
Deduct 2.84 for the 2.84% year over year positive GDP
Deduct 1.87 for the estimated 1.87% positive Household Income
2.89 remains and thus 2.89 is the ESI for July 2018
The U-6 counts the regular unemployed (known as the official Unemployment Rate or U-3), plus those marginally attached to the workforce (halfway looking for jobs), plus those who have part time jobs because they can’t find full-time jobs due to the state of the economy. The Economic Stress Index uses a rolling 3-month average of the U-6.
The year-over-year/12 month percent change in U.S. Gross Domestic Product (GDP).
The year-over-year change in estimated Household Income based on a three month moving average.