Embargoed for release: Surve

3:00 pm Eastern Time

The Chica
2:00 pm Central Time
The Detroit Economic Activity Index suggestin
April 19, 2017
The CFSB
May 1, 2018 Contact: Activity In
Laura LaBarbera •
Resp
Media Relations optim
The Detroit Economic Activity Index measures growth in economic activity Federal Reserve
for the city Bank of Chicago
of Detroit. The index for th
312-322-2387
is constructed using a mixed-frequency dynamic factor model of 23 Detroit-specific data series capturing income, and t
employment, residential and commercial real estate activity, electric customer counts, tax revenues, and port activity. presi
What is the Survey of Business Conditions? auto
It is calibrated so that Detroit’s historical growth trend (average) equals zero, meaning that an index value greater than
To support its Beige Book efforts, the
zero implies the city’s economic activity is growing faster than trend and, conversely, a value
Chicago less information
Fed gathers than zerofrom implies
its its • The p
businessunits
contacts usingtrend
an online survey
hiring
activity is growing slower than trend. The index is then measured in standard deviation from growth.
system. Respondents are asked to rate • The p
various aspects of business conditions
Detroit Economic Activity Index of ca
along a seven-point scale ranging from
“substantially increased” to “substantially capit
(standard deviations from trend) rema
decreased.” A series of diffusion indexes
The Detroit Economic Activity Index was +1.04
summarizing the distribution of responses • The w
in February 2018, indicating growth above
is then calculated.
2 trend. Over the past year, the index has aver- index
How are the indexes constructed?
aged +0.67, above its long-run average. Activ
Respondents’ answers on the seven-point
0 scale are assigned a numeric value ranging
75
from +3 to –3. Each diffusion index is
calculated as the difference between the
−2 number of respondents with answers 50
above their respective average responses
and the number of respondents with
Averages
answers below their respective average 25
−4
Current
responses,Previous
divided by the total number12-months
3-months of
respondents. The index is then multiplied 0
+1.04 +0.60 +0.26 +0.67
−6 by 100 so that it ranges from +100 to
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 −100 and will be +100 if every respondent
provides an above-average answer and -25
–100 if every respondent provides a below-
Current Data (February 2018) average answer. Respondents with no prior
-50
history of responses are excluded from
the calculation.
Series Contribution Historical Range The index can be decomposed into the contribu- -75
What
tions from do the
each numbers mean?
component data series such that 2013
City Income Tax +0.01 Respondents’ respective average answers
the sum of the contributions results in the cur-
Income

Consumer Expenditures 0.00 to a question can be interpreted as repre-

rent value of the index. The contributions com- Manufac
DTE C&I Customer Count 0.00 senting their historical trends or long-run
bine what a given
averages. Thus,series indicates
zero index for the De-
values indicate 75
DTE Residential Customer Count -0.05
troit economy and how related that series is to
that, on balance, activity, hiring, capital
Per Capita Income 0.00
spending, of
other measures or cost pressures
economic are growing
activity. at that
Series 50
Employment +1.36 are moretheir trend rates
closely or that
related outlooks
to other are neutral. re-
components
Labor

Labor Force Participation Rate 0.00 ceive a Positive index values

larger weight indicate
in the index above-average
and will have
growth (or optimistic outlooks) on balance, 25
Unemployment -0.25 larger contributions to the current index value.
and negative values indicate below-average
Weekly Hours Worked 0.00
growth (orrange
The historical pessimistic outlooks)
indicates howon balance.
strong the 0
Building Permits 0.00 current contribution of a series is relative to its
City Property Tax 0.00 history. A contribution to the far right of its
-25
Commercial Construction 0.00 range indicates the strongest reading from a se-
Commercial Leasing 0.00 ries since nextwhile
The1998 CFSBC a contribution to the far left
will be released: -50
Real Estate

Condo Sales 0.00 indicates the weakest reading.

Home Sales +0.01
May 31, 2017
3:00 pm Eastern Time
Median Condo Price +0.01 -75
Median Home Price -0.02
2:00 pm Central Time 2013
Net Absorption CRE 0.00 Notes:
firms th
Non-office Rents +0.01 similar
terms,
Office Rents 0.00 growth
Vacancy Rate CRE 0.00 The Detroit Economic Activity Index is a re-
search project of the Federal Reserve Bank of
Trade

Exports -0.03
Chicago. For more information, contact Paul
Imports 0.00
Traub: paul.traub@chi.frb.org.