The Economic Stress Index for the first quarter of 2022 was 3.42. The lower the index, the better the economy is. For example, for all of 1999, during the tech boom, the Economic Stress Index was 0.0, while for all of 2020 - during the Coronavirus lockdowns - the ESI was 19.9, the worst year on record dating back to 1973.
Underemployment (the U-6) averaged 6.76 in the three months ending with the June 2022 jobs report released in early July 2022. Gross Domestic Product (“The Economy”) was 1.61% higher in the second quarter from the same quarter a year earlier. Total Disposal Personal Income minus government money, such as Social Security and Unemployment, was higher by 1.73 percent.
Economic numbers that reflect a bad part of the economy (such as Underemployment) add to the Economic Stress Index. An economic number that reflects a good part of the economy (a rising GDP) reduces the ESI. Therefore, the Economic Stress Index for the Second Quarter of 2022 adds up as follows:
6.76 is the base number to reflect the average 6.76% Underemployment Rate in the last three months.
1.61 is subtracted to reflect the 1.61% year-over-year gain in the GDP.
1.73 is subtracted to reflect the 1.73% rise in Disposal Personal Income year over year.
3.42 is the ESI for the second quarter of 2022.
The Disposal Income for this report is line 36 of table 2.6 of the BEA's national income and product account.
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.)