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Economy in Brief

Chicago Fed National Activity Index Falls Sharply
by Tom Moeller  October 28, 2019

The Federal Reserve Bank of Chicago reported that its National Activity Index declined to -0.45 during September from 0.15 in August, revised from 0.10. It was the lowest index level since April. The three-month moving average, which smoothes out volatility in the monthly figures, fell to -0.24 last month versus -0.06 in August. The figure remained below the December 2017 high of 0.51. 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, deteriorated to -0.25 from -0.10. That remained below the peak of 0.51 in December 2017.

Declines in each of the component series contributed to last month's fall in the National Activity Index. The Production & Income series led the declines, falling to -0.37 and reversing an August rise. It was the lowest level since April. The Personal Consumption & Housing Index eased to -0.04 and also reversed the prior month's improvement. The Sales, Orders & Inventories group eased to -0.02 from -0.01 and remained below the high of 0.21 reached in January. The Employment, Unemployment & Hours series slipped to -0.02 from -0.03. It has been moving sideways since May.

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 Sep Aug Jul Sep '18 2018 2017 2016
National Activity Index (percent) -0.45 0.15 -0.41 0.08 0.18 0.16 -0.11
 3-Month Moving Average -0.24 -0.06 -0.15 0.27 -- -- --
Diffusion Index -0.25 -0.10 -0.20 0.19 0.17 0.09 -0.19
  Production & Income -0.37 0.19 -0.26 0.01 0.09 0.08 -0.06
  Employment, Unemployment & Hours -0.02 -0.03 -0.05 0.07 0.12 0.08 0.02
  Personal Consumption & Housing -0.04 0.00 -0.04 -0.07 -0.06 -0.05 -0.07
  Sales, Orders & Inventories -0.02 -0.01 -0.05 0.08 0.02 0.05 -0.01
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