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Economy in Brief

Chicago Fed Index Slipped
by Tom Moeller January 28, 2010

Forward momentum in the U.S. economy recently stalled. After earlier improvement, the Chicago Fed National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago slipped last month to a reading of -0.61 and remained down from the July high. Nevertheless, the index level remained up from the series' low of -4.09 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 was roughly stable 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. 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 slipped during December but remained near its highest level of the year. Indicators for the auto, steel, machinery and resource sectors were roughly unchanged. The Chicago Federal Reserve figures are available in Haver's SURVEYS database. 

Chicago Fed December November October 2009 2008 2007
CFNAI -0.61 -0.39 -0.83 -1.64 -1.76 -0.34
  3-Month Moving Average -0.61 -0.68 -0.76 -- --
    Personal Consumption & Housing  -0.50 -0.46 -0.48 -0.51 -0.33 -0.10
    Employment, Unemployment & Hours -0.27 -0.11 -0.39 -0.74 -0.63 -0.15
    Production & Income 0.13 0.25 0.02 -0.22 -0.56 -0.05
    Sales, Inventories & Orders 0.03 -0.07 0.04 -0.17 -0.25 -0.06
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