^*Robert Dye is the Senior Economist for PNC Financial Services Group where he provides global, United States, and regional economic analysis for PNC. His previous work experience includes Realpoint, Moody's Economy.com, and The WEFA Group. He has taught at Temple University, the University of Pennsylvania, and at Pittsburgh University. He received a B.S. in petroleum engineering from Marietta College, an M.S. in natural resources from Ball State University, and a Ph.D. in energy management and policy from the University of Pennsylvania. Chad Sutherland is a junior at the Villanova University School of Business, where he is an honors student with a double major in economics and finance. He was an intern with the PNC Financial Services Group's Economics Department in Pittsburgh, Pennsylvania during the summer of 2008.

Abstract

We present an improvement on the Misery Index that quantifies the economic stress that households are feeling today. Much of the economic stress in households today stems from the decline in household wealth that has come as a result of falling house prices, so we have added a measure of house price change to the Misery Index. Deteriorating economic conditions in most U.S. regions through the first three quarters of 2008 have resulted in increasing household economic stress as all components of the expanded Household Economic Stress Index increased. The components are the rate of change in the consumer price index, the unemployment rate, and rate of change in house prices. The authors show that this intuitive and simple index is useful in analyzing mortgage delinquencies both nationally and regionally.