Index Methodology

The Santa Clara University Business Index: Silicon Valley Outlook survey polls SCU Advisory Board members and alumni of the MBA program on the third Monday of each month with a view to forecasting sentiment about the Valley's economic trends. The monthly survey was initiated in February, 2003. Our sample accesses a highly qualified group of individuals who populate the employment base of Silicon Valley.

The brief survey invites respondents to assess the business outlook using 3 forward-looking and 3 backward-looking indicators, thereby capturing sentiment of the past six months' trend and its counterpart six months into the future. The survey uses a 5-point scale, with 1 indicating a "Much worse" situation and 5 indicating a "Much better" situation.

The SCU Business Index is based on the averages of these survey indicators to provide both a backward- and forward-looking swing indicator of business sentiment in the Valley. The Indexes range from 0 to 100, centered on 50. Values below 50 imply negative outlook, and those above 50 imply positive outlook. A comparison of the Backward index to the Forward index reveals the change in sentiment. The survey is conducted every month and over time results may serve as an early warning system of upswings and downswings in the Silicon Valley economy.