The Economic Stress in April 2020 was - preliminary - at 15.58 which is a spike from the 2.42 average for all of year 2019. The lower the index, the better the economy is. For example, for all of year 1999, during the tech boom, the ESI was 0.0; making it of the best year on record. For all of 2009, during the aftershocks of the Great Recession, the ESI averaged 19.39; a record high which will likely be broken for all of 2020.
Underemployment (the U-6) averaged 12.9% in the last three months ending with the April 2020 jobs report released early May, but this three month average includes the U6 of February and March which were both much lower than April's 22.4 Underemployment. Gross Domestic Product (“The Economy”) was 0.32% higher in the last quarter compared to the same quarter a year earlier. Household Income for the last three months (Feb-March-April) was not released by Sentier Research but we assume the three month average was down at least 3% compared to the same three months a year ago.
Economic numbers that reflect a bad part of the economy (such as Underemployment or a loss in Household Income) adds to the ESI, and an economic number which reflect a good part of the economy (such as rising GDP) reduces the ESI. Hence, the Economic Stress Index for April 2020 adds up as follows:
12.9 is the base number; reflecting the average 12.9% Underemployment Rate in the last three months.
0.32 is deducted to reflect the year over year 0.32% growth in GDP.
3.00 is added to reflect the 3.00% drop in Household Income.
= 15.58 which is the ESI for April 2020.
Please note that because we don't have yet income data for the last three months, this report is preliminary. In addition, please note that because this report involves a few months before the full Coronavirus lock-down, the current report does not fully absorb the full economic shock from the lock-downs.
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) and also those who have part time jobs because they can’t find full-time jobs due to the state of the economy. This is basically the broadest measure of the unemployment picture in the US. The monthly Economic Stress Index uses a rolling 3-month average of the Seasonally Unadjusted U-6.
The percent change in GDP of the latest quarter compared to the same quarter a year earlier. In the Annual section it is the annual percent change in GDP (Gross Domestic Product) of the current year compared to the full year before.
We look at the year over year change in Disposal Personal Income for the monthly report and at Household Income by the Census for the annual report. The monthly report looks at a three-month average, such as this year’s fist quarter compared to last year’s first quarter, while the annual report compares the full year-over-year change. (Until 2020, we used the monthly Household Income data from Sentier Research for the monthly report. However, Sentier stopped releasing it so we are using Disposal Personal Income minus government transfers such as social security payments. The report is released monthly by the Commerce Department.)