The Associated Press Economic Stress Index combines three economic indicators -- unemployment, foreclosures and bankruptcy -- as a way of gauging how the recession has affected each of America's 3,141 counties.
That measurement is expressed on a scale of 0 to 100. The information comes from three sources:
- The unemployment data comes from the Bureau of Labor Statistics, which releases a monthly report on unemployment in every county in America. The rate is calculated by dividing the number of unemployed workers by the number of eligible workers in the county.
- The foreclosure rates track an inventory of all properties in various stages of foreclosure during a given month. These are collected by a private company, RealtyTrac, which compiles data for most U.S. counties.
Most of the counties that lack foreclosure data have very small populations and are heavily concentrated in Midwestern states with low foreclosure rates.
- AP reporters compiled the bankruptcy data, almost 3 million filings from the 90 U.S. bankruptcy districts. They then tabulated the number of new bankruptcy filings in the current month with the 11 months previous and divided that figure by the number of IRS tax filings in the county. This annualized rate avoids seasonal gyrations in filings.
The formula was created with the help of University of Pennsylvania professor Tony Smith, an expert in spatial statistics.
It calculates the chances that someone in a county is unemployed, has a property in foreclosure or is facing bankruptcy.
The three variables are treated as independent events and weighted equally. If one person lost a job and their home, they count twice in the formula. If they also filed for bankruptcy, they count three times.
That produces a numerical value on a scale of 1 to 100. If a county has an Economic Stress score of 20, this means that there is a 20 percent chance that a random worker, property owner or taxpayer in the county is suffering at least one of these three misfortunes.