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Economy in Brief

Chicago Fed Index Improved To Highest Level Since October
by Tom Moeller May 26, 2009

The Chicago Federal Reserve Bank reported that its National Activity Index improved during April to the highest level since October of last year. The reading of -2.06 was up from a downwardly revised March figure. Both figures were up from the series' low of -3.99 reached this past January. Since 1970 there has been a 74% correlation between the level of the index and the q/q change in real GDP.

The three-month moving average of the index also improved to its highest level since December.

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.

The production and income components made the largest positive contributions to the April CFNAI. Twenty-two of the index components had a positive influence while 63 made a negative contribution.

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 March to its lowest level since 1994. Indicators for the steel, machinery and resource sectors each fell sharply but the measure for the auto sector rose.

The Chicago Federal Reserve figures are available in Haver's SURVEYS database.

Interactions between Monetary and Fiscal Policy in the Current Situation is last week's speech by Fed Vice Chairman Donald L. Kohn and it can be found here.

Chicago Fed April March April '08 2008 2007 2006
CFNAI -2.06 -3.36 -1.06 -1.78 -0.36 0.03
  3-Month Moving Average -2.65 -3.39 -1.15 -- -- --
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