USA: Economic Policy Uncertainty Composite Index (NSA)

To measure policy-related economic uncertainty, an index is constructed from three types of underlying components. The first and most flexible component quantifies newspaper coverage of policy-related economic uncertainty. For the United States, the newspaper-based component is an index of search results from 10 large newspapers. The newspapers included in index are USA Today, the Miami Herald, the Chicago Tribune, the Washington Post, the Los Angeles Times, the Boston Globe, the San Francisco Chronicle, the Dallas Morning News, the New York Times, and the Wall Street Journal. From these papers, a normalized index is constructed of the volume of news articles discussing economic policy uncertainty.The second component of the index draws on reports by the Congressional Budget Office (CBO) that compile lists of temporary federal tax code provisions.The measure of the level of uncertainty regarding the path that the federal tax code will take in the future is created as annual dollar-weighted numbers of tax code provisions scheduled to expire over the next 10 years. The third component of the policy-related uncertainty index draws on the Federal Reserve Bank of Philadelphia’s Survey of Professional Forecasters. The authors of index utilize the dispersion between individual forecasters’ predictions about future levels of the Consumer Price Index, Federal Expenditures, and State and Local Expenditures to construct indices of uncertainty about policy-related macroeconomic variables.