The Foundation for Economic Education, the venerable libertarian publisher of The Freeman, makes a rare foray into pop-econometrics with a "Distress Index" that indicates continuing economic troubles. Here's what they say:
Despite a reported increase in GDP in Q3 of 2009, the overall economy remains in deep distress says the Foundation for Economic Education, publisher of the Distress Index. The Distress Index combines government statistics measuring inflation, unemployment, GDP, household debt and industrial capacity utilization. The current score is 58.4, down slightly from a peak of 61.7 in June, the highest since 1975.
Historical analysis shows some correlation between the index exceeding 47.0 and the economy slipping into recession. In March of 1975, the index reached an all-time high of 63.9, more than double the all-time low of 29.5 in February 1973. The index was lowest in the 1990s, averaging 40.1. But the last decade has shown a significant increase to an average of 46.6. Since President Obama took office, the index has averaged 60.3.
The Distress Index was created by Mount Olive College’s Dr. Paul Cwik and FEE’s Web Director Mike Van Winkle. It is intended as a modernized version of economist Arthur Okun’s Misery Index which measured only unemployment and inflation.
The index itself, and how it was calculated.