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Economy in Brief

Chicago Fed National Activity Index Indicates Improved Economic Growth
by Tom Moeller  June 23, 2014

The Chicago Federal Reserve reported that its National Activity Index (CFNAI) for May gained to 0.21 and recovered the April decline to -0.15, revised from -0.32. The reading indicates that overall U.S. economic activity is on a moderate growth track. That follows the weather-induced shortfall this winter when the January figure fell to -0.79. As of last month, the three-month moving average stood at 0.18, compared to the low of -0.13 three months ago. During the last ten years, there has been a 77% correlation between the Chicago Fed Index and the q/q change in real GDP.

The Production & Income reading improved to 0.20 and recovered its April decline to -0.23. Also recovering was the Sales, Inventories & Orders series to 0.04 from -0.03. The Employment, Unemployment & Hours reading deteriorated to a still-positive 0.10 but the Personal Consumption and Housing figure remained weak at -0.12. The Chicago Fed reported that during May, 52 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 May Apr Mar  May'13 2013 2012 2011
CFNAI 0.21 -0.15 0.49 0.00 -0.01 -0.05 -0.07
 3-Month Moving Average 0.18 0.31 0.10 -0.20 -- -- --
  Personal Consumption & Housing -0.12 -0.15 -0.05 -0.15 -0.15 -0.21 -0.29
  Employment, Unemployment & Hours 0.10 0.26 0.17 -0.03 0.09 0.10 0.13
  Production & Income 0.20 -0.23 0.27 -0.05 0.02 0.04 0.05
  Sales, Orders & Inventories 0.04 -0.03 0.10 0.17 0.03 -0.01 0.03
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