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Fraywire Economic Robustness Index (ERI)

An economic model measuring the health of the US economy.
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Fraywire Economic Robustness Index (ERI)
Fraywire Economic Robustness Index ERI • Monthly
60.9
▲ 13.1 (3m)
Last updated 2025-10-07 17:19

Why the score looks like this

ERI printed 60.9 (up 13.1 pts over 3 months). Strength came from Credit Spread (BAA–10y). Drags were Term Spread (10y–3m). On net, credit & labor led while curve lagged.

  • Credit spreads tightened (BAA–10y): less credit stress; financing conditions more supportive.
  • Yield curve flat/inverted (10y ≤ 3m): tight policy; forward growth caution persists.
  • Term Spread (10y–3m) improved over the last 3 months.
0 = weak • 50 = neutral • 100 = strong
Unemployment Rate (Level, ↑ worse) PCE Inflation (YoY) (YoY, ↑ worse) Industrial Production (YoY) (YoY, ↑ better) Real Retail Sales (YoY) (YoY, ↑ better) Durable Goods Orders (YoY) (YoY, ↑ better) Term Spread (10y–3m) (Level, ↑ better) Job Openings Rate (Level, ↑ better) Capacity Utilization (Level, ↑ better) Housing Starts (YoY) (YoY, ↑ better) Consumer Sentiment (Level, ↑ better) Credit Spread (BAA–10y) (Level, ↑ worse) Initial Jobless Claims (Level, ↑ worse) Payroll Employment (YoY) (YoY, ↑ better) Real DPI per Capita (YoY) (YoY, ↑ better) Purchasing Power of the Dollar (YoY) (YoY, ↑ better)
What you’re seeing: A composite score of U.S. economic conditions on a 0–100 scale, updated monthly. Higher = stronger overall conditions.
How it’s calculated ERI blends multiple U.S. indicators into a single monthly score from 0 to 100. Year-over-year transforms are applied where noted; levels are normalized globally; “up = bad” series are inverted; then weighted and summed.
IndicatorFRED IDTransformDirectionWeight
Unemployment Rate UNRATE Level ↑ worse 10%
PCE Inflation (YoY) PCEPI YoY % change ↑ worse 10%
Industrial Production (YoY) INDPRO YoY % change ↑ better 10%
Real Retail Sales (YoY) RRSFS YoY % change ↑ better 8%
Durable Goods Orders (YoY) DGORDER YoY % change ↑ better 7%
Term Spread (10y–3m) T10Y3M Level ↑ better 7%
Job Openings Rate JTSJOR Level ↑ better 9%
Capacity Utilization TCU Level ↑ better 6%
Housing Starts (YoY) HOUST YoY % change ↑ better 6%
Consumer Sentiment UMCSENT Level ↑ better 6%
Credit Spread (BAA–10y) BAA10Y Level ↑ worse 6%
Initial Jobless Claims ICSA Level ↑ worse 4%
Payroll Employment (YoY) PAYEMS YoY % change ↑ better 8%
Real DPI per Capita (YoY) A229RX0 YoY % change ↑ better 5%
Purchasing Power of the Dollar (YoY) CUUR0000SA0R YoY % change ↑ better 2%

What’s inside the ERI

The ERI blends a handful of time-tested macro indicators into a single score. Below is what we track, why it matters, and how changes are interpreted in the model.

Unemployment Rate FRED: UNRATE
Up = Bad

Captures labor slack. Rising unemployment often precedes slower consumption and broader slowdowns.

How ERI reads it: Lower is better. ERI penalizes sustained uptrends and rewards persistent declines.
Release Monthly (BLS)
Typical Lag ≈ 1st Friday after month end
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PCE Inflation (YoY) FRED: PCEPI
Up = Bad

The Fed’s preferred inflation gauge. Elevated or re-accelerating inflation erodes real incomes and raises policy risk.

How ERI reads it: Lower/stable is better. ERI penalizes re-acceleration; moderating prints help.
Release Monthly (BEA)
Typical Lag ≈ 4–5 weeks after month end
Explore Open chart →
Industrial Production FRED: INDPRO
Up = Good

Real-economy output proxy. Weakness here often lines up with profit slowdowns and softer employment.

How ERI reads it: Higher trend is better. ERI rewards rising YoY momentum, penalizes contraction.
Release Monthly (Fed)
Typical Lag ≈ mid-month
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Real Retail Sales FRED: RRSFS
Up = Good

Consumption is ~70% of GDP. Real (inflation-adjusted) spending signals household strength.

How ERI reads it: Higher/stable is better. ERI tracks YoY momentum to downweight noisy monthly swings.
Release Monthly (Census, deflated)
Typical Lag ≈ mid-month
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Durable Goods New Orders FRED: DGORDER
Up = Good

Capex & manufacturing pipeline. Orders lead production and hiring cycles.

How ERI reads it: Higher trend is better. ERI smooths volatility and watches ex-transport where relevant.
Release Monthly (Census)
Typical Lag ≈ 3–4 weeks after month end
Explore Open chart →
Yield Curve (10Y–3M) FRED: T10Y3M
Up = Good

Curve inversions tighten credit & precede slowdowns with long/variable lags.

How ERI reads it: Steeper (more positive) is better. ERI penalizes deep or persistent inversion.

How to read ERI

  • Above 60: Robust — broad strength across labor, production, and spending.
  • 40–60: Neutral — mixed signals; watch trend and breadth.
  • Below 40: Fragile — rising risk of slowdown if weakness persists.

Methodology (plain English)

Each indicator is transformed (YoY level/momentum where appropriate), direction-normalized (so “bad up” series move the score down), and weighted. We smooth noisy series and emphasize persistence over one-off surprises.

Why these indicators?

Together they cover jobs, prices, production, spending, capex, and financial conditions. Fewer, higher-quality inputs make ERI easier to explain — and more durable through revisions.

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