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Economy in Brief

U.S. Chicago Fed Index Deteriorates M/M But Trend Is Positive
by Tom Moeller  March 26, 2012

The February National Activity Index (CFNAI) from the Chicago Federal Reserve reversed its earlier improvement and returned to negative territory. The index fell to -0.09 from 0.33 in January which was revised higher, as was December's reading. Improving, however, was the three-month moving average as it rose to 0.30, its highest since April 2010. During the last ten years there has been an 81% correlation between the Chicago Fed Index and the q/q change in real GDP.

A lower Production & Income component again was behind most of the m/m deterioration in the total. Reversing two months of improvement was the Employment, Unemployment & Hours series. Production & Income also fell to its lowest since November. Personal Consumption & Housing was still negative and Sales, Orders & Inventories were fairly constant m/m. The Chicago Fed reported that fifty-two of the 85 individual indicators made positive contributions to the index in January while 33 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.

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

Recent Developments in the Labor Market is this morning's speech by Fed Chairman Ben S. Bernanke and it is available here.

Chicago Federal Reserve Bank Feb Jan Dec Feb'11 2011 2010 2009
CFNAI -0.09 0.33 0.66 -0.33 -0.07 0.00 -1.62
 3-Month Moving Average 0.30 0.22 0.12 0.12 -- -- --
  Personal Consumption & Housing -0.27 -0.29 -0.29 -0.36 -0.32 -0.32 -0.36
  Employment, Unemployment & Hours 0.18 0.36 0.28 0.36 0.12 0.04 -0.82
  Production & Income -0.01 0.30 0.51 -0.10 0.09 0.22 -0.27
  Sales, Orders & Inventories 0.01 -0.03 0.15 -0.22 0.04 0.07 -0.16
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