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Economy in Brief

Chicago Fed Index Indicates Recession
by Tom Moeller April 21, 2008

The National Activity Index (CFNAI) for March, published by the Chicago Federal Reserve Bank, improved slightly to -0.78 from its low February reading of -1.28. Nevertheless, the recent level was near the lowest since early 2003 and was just above the levels reached during the 2001 recession.

A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of roughly 3%. During the last twenty years there has been a 68% correlation between the level of the CFNAI and q/q growth in real GDP. An index level at or below -0.70 typically has indicated negative U.S. economic growth.

The complete CFNAI report is available here and the historical data are available in Haver's Surveys database.

Each of the four broad categories of indicators — employment, production, consumption and housing — continued to make negative contributions to the CFNAI during March.

The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production & income, the labor market, personal consumption & housing, manufacturing & trade sales, and inventories & orders.

Economic Trends and the Chicago Fed National Activity Index from the Federal Reserve Bank of Chicago is available here.

Globalization and Inflation Dynamics: The Impact of Increased Competition from the Federal Reserve Bank of New York can be found here

Chicago Fed March February March '07 2007 2006 2005
CFNAI -0.78 -1.28 0.05 -0.42 -0.05 0.26
  3-Month Average -0.86 -0.92 -0.41 -0.34 -0.03 0.26
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