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Economy in Brief

Chicago Fed Index Increases To Nearly Highest Since 2007
by Tom Moeller February 22, 2010

The U.S. economy regained forward momentum last month. The January Chicago Fed National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago rose to a reading of 0.02 from a little-revised -0.58 in December. Also pointing toward positive economic growth was the rise from the series' low of -4.14 reached one year ago. During the last ten years the has been a 76% correlation between the index level and the q/q change in real GDP.

The three-month moving average of the index, which smoothes out some of the series' volatility, also rose to its highest level since 2007.

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 3.0%. The complete CFNAI report is available here.

The Chicago Fed indicated that the production & income series made the largest positive contribution to the series improvement in January. Overall, 50 of the 85 individual indicators made positive contributions to the index while 35 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.ยท In a separate survey, the Chicago Fed indicated that its Midwest manufacturing index slipped during December but remained close to 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. 

The Challenges Ahead is the title of N.Y. Federal Reserve Bank President William C. Dudley's comments and they are available  here

Chicago Fed January December November 2009 2008 2007
CFNAI 0.02 -0.58 0.06 -1.64 -1.79 -0.35
  3-Month Moving Average -0.16 -0.47 -0.59 -- -- --
    Personal Consumption & Housing  -0.45 -0.49 -0.42 -0.49 -0.32 -0.09
    Employment, Unemployment & Hours -0.01 -0.26 0.12 -0.76 -0.67 -0.15
    Production & Income 0.45 0.14 0.25 -0.23 -0.56 -0.05
    Sales, Inventories & Orders 0.04 0.03 0.11 -0.15 -0.25 -0.06
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