Economists are often known for giving complex answers to questions and responses that are conditional on a series of stated assumptions rather than simple yes-no replies that many non-economists typically would prefer to alternatively receive. This behavior reflects both disciplinary training and the reality of the world being “messy and complicated.” At the core of this situation is uncertainty on the future of a host of details that could alter the underlying economic situation.
Appreciating this state of affairs is always important but surrounding issues are certainly highlighted at a time of notable political contention and the ongoing partial U.S. governmental shutdown. Given this backdrop, it is worth noting Economic Policy Uncertainty which is an effort at tracking policy-related uncertainty using an index informed by media coverage, federal tax code provisions set to expire, and disagreement among economic forecasters. In September 2013, the US Economic Policy Uncertainty Index was higher (indicating elevated uncertainty) than levels estimated for many prior periods including the “Black Monday” period of November 1987. While October values are obviously not yet available, it seems likely they will reflect even more uncertainty than estimated in September and may well exceed levels previously seen primarily during outbreaks of major military events.