There is a highly sophisticated economic indicator used by millions of Americans every day.
It is called:
Something feels off.
You notice groceries cost more.
Your insurance bill arrives and apparently your insurance company has developed expensive new hobbies.
Your house is worth more, which sounds wonderful until you remember you still need somewhere to live.
The stock market is setting records.
Your neighbor just got laid off.
The unemployment rate looks fine.
Your credit-card statement does not.
Someone on television announces that the economy is strong.
Someone on another channel announces that civilization will end by Thursday.
And you are standing in Kroger wondering when a bag of groceries became a financing decision.
So:
Is the economy actually in trouble?
That turns out to be a harder question than it sounds.
The Problem With One Number
We love economic numbers.
GDP.
Inflation.
Unemployment.
The Dow.
Interest rates.
Consumer confidence.
Each tells us something.
None tells us everything.
GDP can be growing while households are getting squeezed.
Inflation can be falling while prices remain painfully high.
Unemployment can still look healthy while hiring has already begun to deteriorate.
The stock market can be doing wonderfully while parts of the credit system are quietly developing a nervous twitch.
This is the economic equivalent of checking someone’s temperature and declaring:
Good news. Your leg probably isn’t broken.
Useful measurement.
Wrong question.
Crashes Usually Don’t Send Invitations
The events that cause serious economic trouble rarely begin with a giant flashing sign saying:
SYSTEMIC CRISIS STARTS TUESDAY. PLEASE PLAN ACCORDINGLY.
They begin somewhere.
Housing.
Banks.
Energy.
Credit.
Markets.
Employment.
Inflation.
Government finance.
Sometimes the original problem stays contained.
Sometimes it spreads.
And that difference matters enormously.
A stock-market decline is unpleasant.
A stock-market decline that damages credit markets is something else.
A banking problem is concerning.
A banking problem that disrupts lending, forces asset sales, tightens household credit, damages businesses and starts affecting employment is no longer merely a banking problem.
The important question isn’t just:
What’s broken?
It’s:
What can the break reach?
So We Started Building Something
Our working model looks at economic stress as three separate questions.
How vulnerable are we before something happens?
What shock is hitting us?
How much ability do we still have to respond?
That distinction matters.
Imagine two houses experiencing the same storm.
One has a new roof, good drainage, an emergency generator and plenty of money in the bank.
The other has three missing shingles, a basement already taking water and an extension cord running through the kitchen because nobody wants to discuss the electrical panel.
Same storm.
Very different problem.
Economies work that way too.
Vulnerability Matters Before the Crisis
Some problems become dangerous because the system was already fragile.
Debt matters.
Asset valuations matter.
Bank balance sheets matter.
Household finances matter.
Market leverage matters.
Government finances matter.
None necessarily causes a crisis by itself.
But they can determine what happens when something else goes wrong.
That’s why simply watching today’s bad news isn’t enough.
We also need to know how much dry tinder was sitting there before anyone dropped the match.
Then Comes the Shock
This part usually gets the headlines.
A market falls.
A bank fails.
Oil spikes.
Inflation jumps.
Employment weakens.
Credit freezes.
Something breaks.
But even here, magnitude alone doesn’t tell us enough.
We care about several things.
How big is it?
How fast is it moving?
How long is it lasting?
And perhaps most importantly:
What is it connected to?
A dramatic event in an isolated corner of the system may ultimately matter less than a smaller event sitting at the intersection of banking, credit and household finance.
Economic danger isn’t just about size.
It is about transmission.
Then We Meet the Fire Department
Here is the part crisis discussions often forget.
America has fire extinguishers.
The Federal Reserve can act.
Congress can act.
Treasury can act.
Regulators can act.
Automatic stabilizers can act.
Banks may have capital cushions.
Households may have savings.
Markets may have liquidity.
Sometimes those defenses stop the problem.
The interesting question is whether they are available this time.
If inflation is already too high, monetary policymakers may have less freedom to slash interest rates.
If government borrowing is already enormous, fiscal intervention may become harder politically or financially.
If several sectors are under stress simultaneously, regulators may have fewer clean options.
The extinguishers can still exist.
But somebody may already be using them in another room.
That Is Where Things Get Interesting
We are especially interested in periods when problems begin interacting.
High inflation.
Weakening employment.
Stressed banks.
Falling markets.
Energy disruption.
Heavy government borrowing.
Limited policy flexibility.
Any one of those could be manageable.
Several at once?
Now everybody starts reaching for the same tools.
That’s the territory we want to measure.
Not:
Are we officially in a recession?
Not:
Did the Dow fall today?
Not:
Is everything terrible?
But:
How much stress is accumulating, where is it traveling, and how much room do we still have to stop it?
History Gets a Vote
Before we put a big shiny meter on this website and announce that America is 73% screwed, we intend to do something terribly unfashionable.
Test it.
Against the past.
The inflation shocks of the 1970s.
The 1987 crash.
The late-1990s market and credit disruptions.
The financial crisis.
The pandemic.
The inflation surge that followed.
And periods when scary things happened but did not become systemic disasters.
That last group may be the most important.
Any model can look brilliant if you only show it disasters and ask whether disasters look bad.
The harder test is whether it can distinguish:
This is ugly
from
This can spread
from
Everybody find a helmet.
No Magic Number Yet
Eventually, we want the public-facing version to be simple.
Something like:
Stress
What’s under pressure?
Matches
What could ignite something larger?
Fire Extinguishers
What defenses are still available?
Degrees of Freedom
How many useful choices do policymakers still have?
And when the reading changes, we want to be able to explain exactly why.
Not:
Our proprietary algorithm has determined…
No.
Show the ingredients.
Show the sources.
Show what changed.
Show the damn receipt.
Because “Fine” Isn’t Good Enough
Maybe the economy really is fine.
Maybe something genuinely dangerous is developing.
Maybe the answer is somewhere irritatingly in between.
But Americans deserve something better than choosing between:
Everything is wonderful
and
Buy canned beans immediately.
So we’re building the model.
Carefully.
Testing it against history.
Trying very hard not to fool ourselves.
And refusing to assign a precise number merely because a precise number looks impressive on a website.
Because sometimes the most accurate economic measurement really is:
Something feels off.
We’d just like to know exactly what.