An Employment-Weighted Municipal Stock Index

Abstract

State and local officials are often tasked with policy decisions that are influenced by projections of future economic conditions. However, properly assessing and predicting local economic performance is challenging. Common macroeconomic indicators can be helpful, but additional tools are needed. Stock indices have traditionally been used in the investment community to evaluate performance. While a recent surge in fundamental indexing has led to a debate over performance measurement, other uses of fundamental indices have been largely ignored. We introduce an employment-weighted stock index as a supplement to traditional forecasting measures for policymakers at the state and local levels.