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Economy in Brief

U.S. Chicago Fed Index Improves
by Tom Moeller  August 20, 2012

The National Activity Index (CFNAI) from the Chicago Federal Reserve rose to -0.13 in July from -0.34 in June, reported as -0.15 last month. The three-month moving average slipped to -0.21. During the last ten years, there has been an 81% correlation between the Chicago Fed Index and the q/q change in real GDP.

Monthly improvement in the index was led by the Production & Income component. Its rise to 0.12 was to the highest level since April. The Sales, Orders & Inventories series also gained to -0.01, its highest since March. The Personal Consumption & Housing index improved slightly while Employment, Unemployment & Hours slipped. The Chicago Fed reported that in July, 49 of the 85 individual indicators made positive contributions to the index while 36 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.

Why Does Unemployment Differ Persistently Across Metro Areas? from the Federal Reserve Bank of Kansas City is available here.

Chicago Federal Reserve Bank Jul Jun May Jul '11 2011 2010 2009
CFNAI -0.13 -0.34 -0.17 0.35 -0.06 0.00 -1.62
 3-Month Moving Average -0.21 -0.18 -0.31 -0.09 -- -- --
  Personal Consumption & Housing -0.22 -0.28 -0.26 -0.28 -0.31 -0.31 -0.35
  Employment, Unemployment & Hours -0.03 0.02 0.06 0.14 0.12 0.03 -0.82
  Production & Income 0.12 0.01 -0.11 0.31 0.09 0.22 -0.27
  Sales, Orders & Inventories -0.01 -0.09 0.13 0.18 0.04 0.08 -0.16
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