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Economy in Brief

Chicago Fed Index Improves To Highest Since 2006
by Tom Moeller May 24, 2010

Economic growth continued to improve last month. The Chicago Fed indicated that its National Activity Index (CFNAI) rose to 0.29 from an upwardly revised March level. The increase was to the highest level since 2006 and added to earlier gains from the series' low of -4.14 reached in January '09. 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 early-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 rebounds in the employment and in the production components contributed to the total index improvement. Overall, 51 of the 85 individual indicators made positive contributions to the index while 34 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 during March to its highest level since December 2008. Indicators for the auto, steel, machinery and resource sectors each rose. The Chicago Federal Reserve figures are available in Haver's SURVEYS database.

Chicago Fed April March February April '09 2009 2008 2007
CFNAI 0.29 0.13 -0.52 -2.12 -1.61 -1.80 -0.3
  3-Month Moving Average -0.03 -0.09 -0.29 -2.65 -- -- --
    Personal Consumption & Housing  -0.41 -0.35 -0.38 -0.56 -0.49 -0.32 -0.09
    Employment, Unemployment & Hours 0.23 0.16 -0.07 -0.89 -0.76 -0.67 -0.15
    Production & Income 0.41 0.23 -0.16 -0.39 -0.23 -0.56 -0.05
    Sales, Inventories & Orders 0.06 0.08 0.11 -0.28 -0.13 -0.25 -0.06
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