Macroeconomic Fragility: A Structural Index of System Stress from War, Debt, and Policy Limits (1945–2025)

This paper introduces a transparent and tractable framework for measuring macroeconomic system stress through a simple structural relationship between accumulated economic commitments and available policy space. The proposed Fragility Index, defined as the difference between Commitments (C) and Policy Space (P), is constructed using publicly available data from the Federal Reserve Economic Data (FRED) database for the United States over the period 1945–2025 . The results show that elevated fragility corresponds to periods of increased macroeconomic vulnerability, often coinciding with recessions, financial instability, and large-scale fiscal mobilization such as wartime episodes . Statistical analysis further supports the framework, demonstrating meaningful correlation with recession periods and strong classification performance. Importantly, the Fragility Index is not designed as a predictive model but as a structural indicator of system pressure. It captures the extent to which economic obligations exceed the system’s capacity to absorb shocks, providing a new lens through which macroeconomic stability, policy constraints, and systemic risk can be interpreted. The study also identifies a potential regime shift since the mid-1990s, where fragility appears persistently elevated—suggesting deeper structural changes driven by globalization, rising debt levels, and financialization. By emphasizing simplicity, transparency, and reproducibility, this framework offers a foundation for further research, policy analysis, and cross-country applications in understanding economic fragility and systemic stress. A simple equation, F = C − P, reveals when economies stop absorbing stress — and start breaking.