Economic Policy Uncertainty

The Economic Policy Uncertainty index is a time-series measure of uncertainty in future US economic policy; i.e., uncertainty over future interest rates, taxes, tariffs, and other government controlled fiscal and monetary policy. It is not explicitly a measure of expected future economic performance, though it is reasonable to believe that stable and predictable economic policy leads to better financial performance for firms, as they are more able to plan for the future. As of March 7, 2025 the Economic Policy Uncertainty Index is at 417. The index is baselined to have an average score of 100 from 1985 inception through 2010. That value is 5.97 standard deviations above normal, indicating that market sentiment is currently Very Pessimistic.

This index is from data compiled by Scott Baker (Kellog), Nick Bloom (Stanford), and Steven Davis (Booth), from www.policyuncertainty.com. The index is composed of 4 underlying components:

• Newspaper keyword analysis: (1/2 total model weight). An analysis of the content published by 10 leading US newspapers, currently: 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. The index is created by normalizing the number of articles with economic policy keywords published monthly (e.g., articles that contain the words 'uncertain' and 'deficit').
• Tax Code Expiration Data (1/6 total model weight). A count of temporary federal tax code provisions. Since temporary provisions can be extended and terminated without warning, they are a source of instability in the economic environment.
• CPI Forecaster Disagreement (1/6 total model weight). A measure of dispersion in CPI (inflation) expectations among the respondents of the Philadelphia Fed's survey of professional forecasters. Higher levels of disagreement about these expectations indicate higher levels of government policy uncertainty.
• Federal & State Spending Forecaster Disagreement (1/6 total model weight). Like the above, a measure of dispersion in the forecast expectations of US state, local, and federal spending.

These data points are compiled and released monthly. CMV members receive a model which is further updated weekly using a newspaper keyword analysis of economic policy uncertainty keywords from over 1,000 US-based newspapers.

The current index values are shown again below:

This model is already self-evident and normalized around a 100-pt score average. However, to create a presentation inline with our other models, we present that same data in terms of the number of standard deviations from the mean, shown below. The gray vertical bands represent economic recessions.

The below table cites all data and sources used in constructing the charts, or otherwise referred to, on this page.