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Economy in Brief

Chicago Fed Index Improved Somewhat
by Tom Moeller July 21, 2008

The Chicago Federal Reserve Bank indicated that its Chicago Fed National Activity Index (CFNAI) for June was again negative. The reading of -0.60 was, however, the least negative since January. It left the three-month moving average of the figure at -0.93, which also was its least negative since January.

An index level at or below -0.70 typically has indicated negative U.S. economic growth. 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.

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

The improvement in June again owed to production-related indicators. Employment, consumption and housing continued to make roughly the same negative contributions to the CFNAI during June.

Thirty-one of the of the eighty-five indicators in the index made positive contributions to the June index while 54 made negative contributions.

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.

Are inflation targets good inflation forecasts? from the Federal Reserve Bank of Chicago can be found here.

Monetary Policy's Third Interest Rate from the Federal Reserve Bank of St. Louis is available here.

Chicago Fed June May June '07 2007 2006 2005
CFNAI -0.60 -1.06 -0.19 -0.42 -0.05 0.26
  3-Month Average -0.93 -1.08 -0.22  
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