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Economy in Brief

Chicago Fed Index Recovered Recent Declines To Best In Two Years
by Tom Moeller December 21, 2009

The U.S. economy seems to be regaining forward momentum. That is the indication from the Chicago Fed National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago. The index improved during November to a reading of -0.32. That gained back the declines during the prior three months and pulled the index level to its highest since November 2007, up from the series' low of -4.13 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 but during the last ten years that correlation has risen to 80%.

The three-month moving average which smoothes out some of the volatility of the index also improved to near its highest level since February of 2008.

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.ยท The Chicago Fed indicated that 36 of the series' individual indicators made positive contributions to the November index while 49 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.

In a separate survey, the Chicago Fed indicated that its Midwest manufacturing index improved modestly during October to its highest level since the June low. Indicators for the auto, steel, machinery and resource sectors each improved. The Chicago Federal Reserve figures are available in Haver's SURVEYS database.  

Chicago Fed November October September November '08 2008 2007 2006
CFNAI -0.32 -1.02 -0.95 -2.99 -1.77 -0.35 0.05
  3-Month Moving Average -0.77 -0.87 -0.61 -2.63 -- -- --
    Personal Consumption & Housing  -0.48 -0.48 -0.64 -0.43 -0.33 -0.10 0.06
    Employment Unemployment & Hours -0.12 -0.42 -0.53 -1.06 -0.62 -0.15 0.01
    Production & Income 0.35 -0.09 0.19 -0.95 -0.55 -0.05 -0.01
    Sales, Inventories & Orders -0.07 -0.02 0.03 -0.53 -0.24 -0.06 -0.01
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