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Economy in Brief

Chicago Fed National Activity Index Improves
by Tom Moeller  September 23, 2019

The Federal Reserve Bank of Chicago reported that its National Activity Index rose to 0.10 during August from -0.41 in July. The three-month moving average, which irons out volatility in the monthly figures, rose to -0.06 last month versus July's reading of -0.14. It was the highest level since January and sharply above the April low. During the last twenty years, there has been a 70% correlation between the Chicago Fed Index and the q/q change in real GDP.

The National Activity Diffusion Index, which measures the breadth of movement in the monthly series, also improved to -0.12 from -0.20. That remained below the peak of 0.41 in December 2017.

Improvement in the August index reflected increases in each of the component series. The Production & Income series led the gains with improvement to 0.16, its highest level in 12 months. The Sales, Orders & Inventories sub-group rose to -0.02 from -0.07, but remained well below its earlier highs. The Employment, Unemployment & Hours series recaptured its July decline and rose to -0.02 from -0.05. It has been moving sideways for six months. The Personal Consumption & Housing reading edged higher to -0.02 from -0.03, yet remained above February's low of -0.11.

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 '18 2018 2017 2016
National Activity Index (percent) 0.10 -0.41 0.13 0.46 0.18 0.16 -0.11
 3-Month Moving Average -0.06 -0.14 -0.28 0.37 -- -- --
Diffusion Index -0.12 -0.20 -0.11 0.27 0.17 0.09 -0.19
  Production & Income 0.16 -0.26 0.08 0.29 0.09 0.08 -0.06
  Employment, Unemployment & Hours -0.02 -0.05 -0.02 0.06 0.12 0.08 0.02
  Personal Consumption & Housing -0.02 -0.03 -0.05 -0.04 -0.06 -0.05 -0.07
  Sales, Orders & Inventories -0.02 -0.07 0.12 0.16 0.02 0.05 -0.01
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