ELI5: Explain Like I'm 5

Economic Policy Uncertainty Index

Okay, imagine you have a toy that you really love playing with, but you're not sure if your parents will let you play with it all the time. Sometimes they might say yes, but other times they might say no. This makes you feel unsure and kinda confused.

Similarly, when people make decisions about money and the economy, there are many things that can affect their choices. One of these things is called "economic policy uncertainty," which basically means that people aren't sure what kinds of decisions the government will make about money and the economy, and how those decisions will affect things like jobs or prices.

Experts try to measure this uncertainty by looking at things like news stories about the economy or government policy, and how much people are talking about these things. They can then create something called the "economic policy uncertainty index," which gives a number that shows how much uncertainty there is at any given time.

So, just like you might feel uncertain about playing with your toy sometimes, people can feel uncertain about how the economy will be affected by government decisions. The economic policy uncertainty index helps economists and policymakers understand how much uncertainty there is and how it might affect the economy.