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Economy in Brief

Chicago Fed Index Indicates That Economic Activity Improved Further
by Tom Moeller July 21, 2009

The Chicago Federal Reserve Bank reported that its June National Activity Index rose further to the highest level since July of last year. The reading of -1.80 was up from May and both figures were higher than 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 August.

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 JUnel 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 May to its lowest level since 1994. Indicators for the auto, steel, and machinery each fell. The Chicago Federal Reserve figures are available in Haver's SURVEYS database.

Today's testimony by Fed Chairman Ben S. Bernanke is available here.

Chicago Fed June May June '08 2008 2007 2006
CFNAI -1.80 -2.30 -0.98 -1.76 -0.35 0.05
  3-Month Moving Average -2.12 -2.65 -1.07 -- -- --
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