Economic Risks
Economic risks can include elections, wars, or recessions. There have been several cycles of economic risks in your lifetime, and we will experience even more in the coming years. International businesses also encounter economic pressures, and so they must plan for downturns even when economic conditions are good. Explore the Economic Policy Uncertainty Index on this page, and read more about how it is developed.
As measured by our index, we find that current levels of economic policy uncertainty are at extremely elevated levels compared to recent history.
Since 2008, economic policy uncertainty has averaged about twice the level of the previous 23 years.
A significant dynamic relationship exists between our economic policy uncertainty index and real macroeconomic variables.
We find that an increase in economic policy uncertainty as measured by our index foreshadows a decline in economic growth and employment in the following months.
We find that the number of large movements in the S&P 500 index, defined as a daily change of 2.5% or more, has increased dramatically in recent years relative to the average since 1980.
Moreover, since 2008, an increasingly large share of these large stock movements have been caused by policy-related events.
