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Last Updated: 03/04/21

Detroit Economic Activity Index (DEAI)

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The Detroit Economic Activity Index measures growth in economic activity for the city of Detroit. The index is constructed using a mixed-frequency dynamic factor model of 24 Detroit-specific data series capturing income, employment, residential and commercial real estate activity, electric customer counts, tax revenues, and port activity. It is calibrated so that Detroit’s historical growth trend (average) equals zero, meaning that an index value greater than zero implies the city’s economic activity is growing faster than trend and, conversely, a value less than zero implies its activity is growing slower than trend. The index is then measured in standard deviation units from trend growth. The DEAI is released at 10 a.m. ET on scheduled days, on a quarterly basis, toward the beginning of March, June, September, and December.


Index Suggests Detroit Economic Growth Declined in December

 

Notes: The DEAI is calibrated so that Detroit’s historical growth trend (average) equals zero, meaning that an index value greater than zero implies the city’s economic activity is growing faster than trend and, conversely, a value less than zero implies its activity is growing slower than trend. The index is then measured in standard deviation units from trend growth.

We use the gross metropolitan product (GMP) growth rate of the Detroit–Warren–Dearborn MSA as a basis for the trend growth rate of the DEAI. The mixed-frequency dynamic factor model underlying the Detroit Economic Activity Index can then be used to create a separate index for Detroit’s annual ”gross city product“ (GCP). This process amounts to transforming the monthly DEAI into an annual growth rate and then scaling it to the annual GMP growth rate.

 

Sources: Chicago Fed staff calculations based on data from Haver Analytics, U.S. Census Bureau, Realcomp II Ltd., CoStar, DTE Energy Co., and City of Detroit.

The model also allows for projections of annual real per capita income for Detroit.

 

Note: All values are in 2019 inflation-adjusted U.S. dollars.
Source: Chicago Fed staff calculations based on data from the U.S. Census Bureau, American Community Survey 1-year estimates.

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