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Economy in Brief

U.S. Chicago Fed National Activity Index Recovers Modestly
by Tom Moeller  March 24, 2014

The Chicago Federal Reserve reported that its National Activity Index (CFNAI) returned to positive territory last month. The gain to 0.14 followed a January reading of -0.45, revised from -0.39, which was the second consecutive negative figure. The latest reading was down from November's high of 0.75. Despite its recent improvement, the three-month moving average fell to -0.18, the lowest level since May. During the last ten years, there has been an 80% correlation between the Chicago Fed Index and the q/q change in real GDP.

Improvement in the overall index was led by the Production & Income reading which bounced up to 0.26 from -0.38. Showing moderate gain was the Sales, Orders & Inventories series, to 0.06 versus 0.00, and the Personal Consumption & Housing reading, to -0.16 from -0.19. To the downside, the Employment, Unemployment & Hours index fell to -0.02 from 0.11, its first negative figure since April. The Chicago Fed reported that during February, 54 of the 85 individual indicators made positive contributions to the overall index 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.

Chicago Federal Reserve Bank Feb Jan Dec Feb'13 2013 2012 2011
CFNAI 0.14 -0.45 -0.24 -0.49 -0.02 -0.07 -0.07
 3-Month Moving Average -0.18 0.02 0.20 0.05 -- -- --
  Personal Consumption & Housing -0.16 -0.19 -0.17 -0.14 -0.15 -0.21 -0.29
  Employment, Unemployment & Hours -0.02 0.11 0.01 0.30 0.09 0.10 0.13
  Production & Income 0.26 -0.38 0.00 0.29 0.02 0.04 0.05
  Sales, Orders & Inventories 0.06 0.00 -0.08 0.04 0.03 -0.01 0.03
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