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Economy in Brief

U.S. Chicago Fed Index Shows Improvement
by Tom Moeller  January 26, 2012

The Chicago Fed's National Activity Index (CFNAI) provided another indication of modest economic improvement. For December, the index rose to 0.17 from -0.46 in November, which was little-revised. The latest figure was its highest since March. The three-month moving average rose to -0.08, also its highest since March. The figures have been negative since Q1. During the last ten years there has been an 80% correlation between the Chicago Fed Index and the q/q change in real GDP.

A higher Employment, Unemployment & Hours series as well as a higher Production & Income component were behind the m/m rise in the total. Personal Consumption & Housing as well as Sales, Orders & Inventories were roughly unchanged. Fifty-three of the 85 individual indicators made positive contributions to the index in December while 32 made negative contributions.

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.

Yesterday's FOMC statement on longer-run goals and policy strategy can be found here

Chicago Federal Reserve Bank Dec Nov Oct Dec'10 2011 2010 2009
CFNAI 0.17 -0.46 0.04 0.46 -0.14 -0.01 -1.62
 3-Month Moving Average -0.08 -0.19 -0.16 -0.03 -- --
  Personal Consumption & Housing -0.29 -0.27 -0.29 -0.38 -0.33 -0.32 -0.37
  Employment, Unemployment & Hours 0.22 0.08 0.01 0.22 0.10 0.02 -0.81
  Production & Income 0.24 -0.28 0.16 0.52 0.06 0.22 -0.27
  Sales, Orders & Inventories 0.01 0.01 0.17 0.12 0.03 0.07 -0.16
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