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Economy in Brief

Chicago Fed Index Well Into Recession Territory
by Tom Moeller December 22, 2008

The National Activity Index (CFNAI) from the Chicago Federal Reserve Bank for November continued on a downtrend and remained in recession territory. The latest reading of -2.47 followed a short-lived October bounce back from two hurricanes. Since 1970 there has been a 75% correlation between the level of the index and the q/q change in real GDP.

The three-month moving average of the index of -2.49 was at its lowest level since January of 1982.

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%.

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

Each category of the index including employment, production, income, consumption & housing made a negative contribution to the November index.

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.

In a separate survey, the Chicago Fed indicated that its Midwest manufacturing index fell during October to its lowest level since 1997. The auto sector continued to lead the weakness but the steel and machinery components also were weak.

Chicago Fed November October November '07 2007 2006 2005
CFNAI -2.47 -1.27 -0.44 -0.40 -0.01 0.28
  3-Month Average -2.49 -2.40 -0.49 -- --  --
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