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Economy in Brief

Chicago Fed National Activity Index Improves During October
by Tom Moeller  November 23, 2020

• Index suggests a pickup in economic growth.

• Component performance remains mixed.

The Federal Reserve Bank of Chicago's National Activity Index rebounded to 0.83 during October after easing to 0.32 in September, revised from 0.27.

The three-month moving average, which smoothes out the m/m volatility in the index, fell to 0.75 in October from 1.37 in September. It was the lowest level since June. During the last 15 years, there has been a 77% correlation between the Chicago Fed Index and quarterly growth in real GDP.

The Production & Income measure rose to 0.36 and reversed September's decline to -0.10. The Sales, Orders & Inventories series rose to the highest level in three months. The Employment, Unemployment & Hours recaptured a piece of September's sharp decline. The Personal Consumption & Housing series weakened substantially, just into negative territory. The diffusion index, which measures the breadth of movement in the components, eased to 0.51 from 0.55. Sixty-one of the 85 components contributed positively to the index overall.

The CFNAI is a weighted average of 85 monthly indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.

These figures are available in Haver's SURVEYS database.

Federal Reserve Bank of Chicago Oct Sep Aug Oct '19 2019 2018 2017
Chicago Fed National Activity Index (+ = Growth Above Trend) 0.83 0.32 1.10 -0.41 -0.14 0.12 0.13
   Production & Income 0.36 -0.10 0.38 -0.24 -0.10 0.07 0.06
   Employment, Unemployment & Hours 0.39 0.30 0.70 -0.01 0.01 0.08 0.06
   Personal Consumption & Housing -0.01 0.12 0.00 -0.01 -0.02 -0.04 -0.03
   Sales, Orders & Inventories 0.08 0.00 0.03 -0.15 -0.03 0.01 0.04
CFNAI 3-Month Moving Average 0.75 1.37 3.22 -0.20 -- -- --
CFNAI Diffusion Index 0.51 0.55 0.72 -0.17 -0.12 0.16 0.11
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