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Economy in Brief

U.S. Chicago Fed National Activity Index Improves
by Tom Moeller  September 23, 2013

The Chicago Federal Reserve indicated that its National Activity Index (CFNAI) jumped last month. The August reading of 0.14 was the first positive figure in six months. There were, however, qualifiers regarding the degree of improvement. First, the gain followed a July reading that was revised lower to -0.43 from -0.15. As a result, the three-month moving average gained just slightly to -0.18 from -0.24. During the last ten years, there has been a 79% correlation between the Chicago Fed Index and the q/q change in real GDP.

Monthly changes in the index components continued to be mixed. A higher Production & Income series drove the August total with an increase to 0.22. The gain reversed its July deterioration to -0.20. The Sales, Orders & Inventories component improved moderately to 0.07 from -0.03. Also rising was the Employment, Unemployment & Hours series to 0.02 from -0.03. Finally, the indicator for Personal Consumption & Housing ticked up to -0.17 from -0.18. The Chicago Fed reported that during August, 48 of the 85 individual indicators made positive contributions to the overall index while 37 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. 

Chicago Federal Reserve Bank Aug Jul Jun Aug'12 2012 2011 2010
CFNAI 0.14 -0.43 -0.24 -0.95 -0.07 -0.08 0.02
 3-Month Moving Average -0.18 -0.24 -0.23 -0.51 -- -- --
  Personal Consumption & Housing -0.17 -0.18 -0.20 -0.23 -0.22 -0.30 -0.30
  Employment, Unemployment & Hours 0.02 -0.03 0.02 -0.01 0.10 0.14 0.03
  Production & Income 0.22 -0.20 0.00 -0.49 0.04 0.05 0.20
  Sales, Orders & Inventories 0.07 -0.03 -0.06 -0.22 -0.01 0.04 0.09
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