The Detroit Economic Activity Index is released by Federal Reserve Bank of Chicago

by Paul Traub

People often ask me, “How is Detroit doing since its exit from bankruptcy?” I usually go into a long explanation of how there have been several signs of improving economic conditions since late 2014, when Detroit emerged from bankruptcy. However, some people would prefer a brief, yet economically meaningful, answer to their question. This has led me to believe that having all of these signs combined into a single easy-to-grasp index of Detroit’s economy would be beneficial.

In collaboration with my Chicago Fed colleague Scott Brave, I came up with a new measure of Detroit-specific economic conditions dubbed the Detroit Economic Activity Index (DEAI). The DEAI is constructed using a mixed-frequency dynamic factor model, but includes 23 Detroit-specific data series capturing income, employment, residential and commercial real estate activity, electric customer counts, tax revenues, and port activity. For a more thorough explanation of the construction of the DEAI, see our Chicago Fed Letter article titled “Tracking Detroit’s economic recovery after bankruptcy with a new index.” In our new research, by using this index (and other measures), Scott and I do an analysis of the city’s economic performance from 1998 through the present day. Eventually, we expect to make the DEAI’s results publicly available on a regular basis, but for now, we will continue developing the index. If interested, we’ll announce the availability of the DEAI on the Chicago Fed website and here in this blog.