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Economy in Brief

Chicago Fed Index Remains Negative
by Tom Moeller  June 23, 2011

As soft as economic growth was in Q1, this quarter looks no better. The Chicago Fed reported that its National Activity Index (CFNAI) remained negative at -0.37 in May following a little-revised -0.56 in April. The three-month moving average of the index, which smoothes out some of the series' volatility, also remained negative. During the last ten years there has been an 81% correlation between the index and the Q/Q change in real GDP.

Three of the component series was negative last month. Employment, unemployment & hours was at the lowest level since September. Personal consumption & housing and sales, orders & inventories were similarly weak. Production & income improved somewhat.

The CFNAI is a weighted average of 85 indicators of economic activity. An index level at or below -0.70 typically has indicated negative U.S. economic growth. A zero value of the CFNAI suggests that the economy is expanding at its historical trend rate of growth. During the last ten years it's had an 77% correlation with the quarterly growth in real GDP.

A separate index covering just the Midwest rose in April to its highest level in over ten years as the factory sector improved. The Chicago Federal Reserve figures are available in Haver's SURVEYS database.

Chicago Federal Reserve Bank May Apr Mar May'10 2010 2009 2008
CFNAI -0.37 -0.56 0.34 0.34 -0.06 -1.59 -1.93
 3-Month Moving Average -0.19 -0.15 0.08 0.31 -- -- --
  Personal Consumption & Housing -0.36 -0.40 -0.38 -0.38 -0.35 -0.40 -0.26
  Employment, Unemployment & Hours -0.04 -0.02 0.21 0.00 0.03 -0.81 -0.67
  Production & Income 0.05 -0.16 0.25 0.64 0.21 -0.26 -0.70
  Sales, Orders & Inventories -0.02 0.02 0.26 -0.15 0.06 -0.12 -0.29
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