================2023 September================

The Economic Stress Index in the 3rd Quarter of 2023 Was:


Underemployment: 7.00
GDP: 2.93
Household Income: 1.78

The Economic Stress Index in the third quarter of 2023 was 2.29 on a scale of 0 for a strong economy, such as in 1999, and above 19.0 in Lockdown Year 2020. The first year of ESI data is 1973.

Underemployment (the U-6) averaged 7.00 in the first quarter, and Gross Domestic Product was 2.93% higher than the same quarter a year earlier. Total Disposable Personal Income minus government money, such as Social Security and Unemployment, was up 1.78% from the same quarter a year ago.

An economic number that reflects a negative, such as Underemployment, adds to the Economic Stress. An economic number that reflects a good part of the economy, such as a rising GDP, reduces the ESI. Therefore, the Economic Stress Index for the Third Quarter of 2023 adds up as follows:

7.00 is the base number to reflect the average 7.00% Underemployment Rate in the first quarter.

2.93 is subtracted to reflect the 2.93% year-over-year growth in the GDP.

1.78 is subtracted to reflect the 1.81% increase in disposable personal income year over year.

= 2.29; the ESI for the second quarter of 2023.

“The Economic Stress Index, derived from three broadest economic data points (GDP, Employment, and Income), was very good in the third quarter despite expectations of a soft landing,” said ESI creator Yossi Gestetner.

(The Disposable Income for this report is line 36 of Table 2.1 of the BEA's national income and product account.)


U6 Explanation

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.

GDP Explanation

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.

Income Explanation

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.)