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Posts tagged with: "USEPUINDXD"

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Do we live in uncertain times?

Ever wonder about the current state of the world? Well, FRED has two relevant indicators for the U.S. that may help you sleep better at night…or maybe worry even more. The first series calculates an index based on the proportion of newspaper stories that discuss uncertainty, changes to tax codes, and disagreement among forecasters. The second series relates more to market sentiment by looking at newspaper stories mentioning the economy, stock markets, and (again) uncertainty specifically. The graph above shows that the two series correlate well, but aren’t in total lock-step. Right now, the first series seems to be about as high as it was during the last financial crisis, although it hasn’t spiked as high as it did in September 2008. The second series shows that the market seems a little less worried about uncertainty, but overall it’s still elevated.

Similar series are available for a few other countries. The graph below shows one for the U.K. The Brexit referendum took place on June 23, 2016, which has clearly contributed to their spike in economic uncertainty in the summer of 2016. And that uncertainty is still elevated compared with previous periods.

How these graphs were created: Search FRED for “uncertainty,” select the series, and click “Add to Graph.”

Suggested by Christian Zimmermann.

View on FRED, series used in this post: UKEPUINDXM, USEPUINDXD, WLEMUINDXD

Economic policy uncertainty

How clear is the public’s understanding of economic policy and its likely outcomes? FRED includes a data series that seeks to answer this question: In a recent paper, Scott Baker, Nicholas Bloom, and Steven Davis developed an index that estimates the level of uncertainty about economic policy by accounting for newspaper references to uncertainty, tax codes, and disagreement among forecasters.

The authors refer to spikes in the index that occurred during important events such as “tight presidential elections, Gulf Wars I and II, the 9/11 attack, and other major shocks.” More-recent events include the Lehman Brothers bankruptcy, the euro crisis, and the debt-ceiling deadlock.

The Federal Reserve has been making an effort to reduce uncertainty by increasing clarity and transparency with respect to its policies. As noted in a previous blog post, FRED also allows you to track the projections made by FOMC members. (Read full-text FOMC statements back to 2009 on the Board’s website.)

How this graph was created: Search for “Economic Policy Uncertainty Index” and change the frequency to “Weekly, Ending Friday.”

Suggested by Abhinav Chhabra

View on FRED, series used in this post: USEPUINDXD

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