What are the economic signals from uncertainty measures?

Malin Andersson, Alina Bobasu and Roberto A. De Santis

Economic Bulletin Boxes, 2025, vol. 8

Abstract: High levels of economic uncertainty may push households and firms to postpone spending and investment decisions, which could dampen economic activity. Given that uncertainty is not directly observable, this box assesses recent signals from a number of uncertainty measures that are derived from statistical methods, surveys, financial data and textual analysis. There is currently a divergence between the relatively low uncertainty indicated by measures associated with the short-term economic situation and the still high – and rising – uncertainty reflected in measures related to longer-term policy issues. Analysis based on a simple empirical framework suggests that increasing uncertainty, especially about economic policies, dampens real GDP, consumption and particularly business investment. JEL Classification: D11, D84, E31

Keywords: economic activity; risk; uncertainty (search for similar items in EconPapers)
Date: 2025-01
Note: 427284
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