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Economy in Brief

Weakness In Chicago Fed Index Eases In June But Worsens In Q2
by Tom Moeller  July 25, 2011

This year's second quarter was a tough one regarding economic momentum. The Chicago Fed reported that its National Activity Index (CFNAI) was again negative during June at -0.46 following a revised -0.55 in May, initially reported as -0.37. The three-month moving average of the index, which smoothes out some of the series' volatility, fell to its lowest since August, 2009. 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 remained negative last month. Personal consumption & housing was the least negative since early last year but employment, unemployment & hours deteriorated to a twelve month low. Production & income remained negative while sales, orders & inventories was somewhat positive. Forty one of the 85 individual indicators made positive contributions to the index. Fifty two improved from May. 

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 remained near its recent high in May as the factory sector improved. The Chicago Federal Reserve figures are available in Haver's SURVEYS database.

Is Consumer Spending the Problem? from the Federal Reserve Bank of Atlanta can be found here.

Chicago Federal Reserve Bank Jun May Apr Jun'10 2010 2009 2008
CFNAI -0.46 -0.55 -0.78 -0.53 -0.05 -1.59 -1.93
 3-Month Moving Average -0.60 -0.31 -0.20 -0.02 -- -- --
  Personal Consumption & Housing -0.31 -0.42 -0.41 -0.39 -0.35 -0.40 -0.26
  Employment, Unemployment & Hours -0.15 -0.07 -0.01 -0.20 0.03 -0.81 -0.67
  Production & Income -0.04 -0.08 -0.17 -0.02 0.21 -0.26 -0.70
  Sales, Orders & Inventories 0.04 0.02 -0.17 0.07 0.06 -0.12 -0.29
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