The Economic Stress Index in October 2018 is 1.40; down from 2.27 in September and down from 2.58 in August. For 2018 through October the ESI averaged 2.95 which is lower than the average of 4.53 for all of 2017. The lower the index, the better the economy is. The historical annual average of the ESI (1973 through 2017), is 7.28.
Underemployment (the U6) averaged 7.46 the last three months ending with the September jobs report released early October, and Gross Domestic Product (“The Economy”) was 3.03% higher the last quarter compared to the same quarter a year earlier. Household Income, per Sentier Research, was 3.03% higher the last three months (July-August-September) compared to the same three months a year earlier.
The October 2018 Index adds up as follows:
7.46 Underemployment is the base number
Deduct 3.03 for the 3.03% year over year positive GDP
Deduct 3.03 for the estimated 3.03% positive Household Income
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.