Michigan Economy Blog

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

April 27, 2017

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.

The views expressed in this post are our own and do not reflect those of the Federal Reserve Bank of Chicago or the Federal Reserve System.

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