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Economy in Brief

U.S. Chicago Fed Index Returns To Negative Territory
by Tom Moeller  September 26, 2011

Economic momentum, one way or the other, is something the U.S. economy can't muster. The Chicago Fed's National Activity Index (CFNAI) was a negative 0.43 in August. That followed a marginally positive July number which was revised up from the slightly negative reading reported last month. The three-month moving average remained weak at -0.28 for August, up slightly from the -0.56 low reported for June. During the last ten years there has been an 80% correlation between the Chicago Fed Index and the q/q change in real GDP.

The Employment, Unemployment & Hours component reentered negative territory after a brief July Improvement. The Production & Income series also showed great deterioration with its return to a negligible 0.01. The Personal Consumption & Housing component of the index deteriorated slightly last month to -0.35 and was not far above the 2009 low of -0.52. Rounding out the story of economic weakness was the Sales, Orders & Inventories series at -0.01; again no expansion, no decline.

The CFNAI is a weighted average of 85 indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend. During August, 41 of the 85 component series made a positive contribution to the overall index while 44 made a negative contribution.

The Chicago Federal Reserve figures are available in Haver's SURVEYS database.

Monetary Policy And Job Creation is the title of this morning's speech by Fed Governor Sarah Bloom Raskin and it can be found here.

Chicago Federal Reserve Bank Aug Jul Jun Aug'10 2010 2009 2008
CFNAI -0.43 0.02 -0.44 -0.47 -0.02 -1.63 -1.94
 3-Month Moving Average -0.28 -0.27 -0.56 -0.23 -- -- --
  Personal Consumption & Housing -0.35 -0.33 -0.33 -0.31 -0.34 -0.38 -0.26
  Employment, Unemployment & Hours -0.08 0.12 -0.09 -0.09 0.03 -0.81 -0.67
  Production & Income 0.01 0.26 -0.08 0.02 0.22 -0.27 -0.70
  Sales, Orders & Inventories -0.01 -0.03 0.05 -0.06 0.07 -0.16 -0.31
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