Policy Uncertainty Index

The Policy Uncertainty Index, developed by a team of professors from Stanford and the University of Chicago, illustrates how uncertainty about the direction of future government policy can weigh on our economy.  The index takes into consideration:

  1. The frequency of news stories on the issue of government policy uncertainty
  2. Expiring federal tax provisions (there happen to be 41 in 2012)
  3. Disagreement among forecasters over inflation and federal government purchases

The professors estimate that the significant increase in policy uncertainty over the past five years (which has increased overall economic uncertainty) has cost our economy 2.5 million jobs.

We would agree that a strong implication of their research is that clarity on future tax and spending policies may lead to acceleration in economic growth.  Today, many businesses are unwilling to invest for growth or hire new employees because of the uncertainty of future tax rates.  Another key issue that continues to burden us is our federal deficit and growing debt level.

The United States and the rest of the developed world need to focus on policies that will support economic growth.  As U.S. citizens we should demand candidates for 2012 election (presidential, congressional, and gubernatorial) put forth their vision for restoring growth and be judged accordingly.


The information in this material is only as current as the date indicated, and may be superseded by subsequent market events or for other reasons. While all information prepared in this document is believed to be accurate, any statements of opinion constitute only current opinions of Payne Wealth Partners, Inc., which are subject to change and which Payne Wealth Partners, Inc. does not undertake to update. Accordingly, you should not put undue reliance on these statements. The information does not attempt to examine all the facts and circumstances that may be relevant to an individual’s financial needs. Payne Wealth Partners, Inc. is not soliciting any action based on these statements.

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