Wednesday, March 18, 2020

Weekly Economic Index

Tracking the Economic Effect of the Coronavirus

Daniel Lewis, Federal Reserve Bank of New York*
James Stock, Harvard University

This note describes a weekly economic index (WEI) developed to track the rapid economic developments associated with the response to the novel Coronavirus in the United States.

The WEI is a composite of 6 weekly economic indicators: Redbook same-store sales, Rasmussen Consumer Confidence, new claims for unemployment insurance, the American Staffing Association Staffing Index, steel production, and wholesale sales of gasoline, diesel, and jet fuel. All series are represented as year-over-year percentage changes. These series are combined into a single index of weekly economic activity. The index closely tracks monthly industrial production and quarterly GDP. Of these six series, five are available by Thursday morning for the week ending the previous Saturday. The most recent values of the index are plotted below.

For the week ended March 14, there were two countervailing effects. Consumer confidence plummeted and new claims for unemployment insurance jumped sharply, but same-store sales surged as a result of the run on groceries and supplies. The other measures of real economic activity, as measured by steel production and sales of gasoline, diesel, and jet fuel, were off only slightly, as firms made only initial adjustments, or no adjustments at all, to the restrictions on movement, and only a few locations had issued emergency declarations or orders to close bars, restaurants, and otherwise restrict large gatherings.Taken together, the weekly index fell, measuring the first widespread economic impacts of the Coronavirus and the response measures.

  • Deck for Brookings Papers on Economic Activity virtual panel on the Coronavirus and the Economy, 3/19/20
  • Deck comparing the index to monthly and quarterly variables
  • Deck with detailed discussion of data sources
  • Deck with methods, sensitivity analysis, and regression validation

*The views expressed are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System.

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