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Economy in Brief

Chicago Fed National Activity Index Declines Again
by Tom Moeller  November 25, 2019

The Federal Reserve Bank of Chicago reported that its National Activity Index fell to -0.71 during October from an unrevised -0.45 in September. It was the lowest level in six months. The three-month moving average smoothes out volatility in the monthly figures. It deteriorated to -0.31 last month, the lowest level since April. 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, was little changed at -0.22. It remained below the peak of 0.51 in December 2017.

Movement in the component series of the National Activity Index was mixed during October. Deterioration in the Production & Income series dominated the overall index decline as it fell to -0.55, a six-month low and down from August's high of 0.18. The Employment, Unemployment & Hours series fell to -0.10, the lowest point since February. Showing some m/m improvement was the Personal Consumption & Housing Index of -0.03 after September's drop to -0.05. The Sales, Orders & Inventories reading of -0.03 compared to -0.04, remained below the high of 0.21 reached in January.

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 Oct Sep Aug Oct '18 2018 2017 2016
National Activity Index (percent) -0.71 -0.45 0.23 0.02 0.18 0.16 -0.11
 3-Month Moving Average -0.31 -0.21 -0.02 0.19 -- -- --
Diffusion Index -0.22 -0.24 -0.09 0.16 0.17 0.09 -0.19
  Production & Income -0.55 -0.36 0.18 0.00 0.09 0.08 -0.06
  Employment, Unemployment & Hours -0.10 0.01 0.03 0.17 0.12 0.08 0.02
  Personal Consumption & Housing -0.03 -0.05 0.00 -0.03 -0.06 -0.05 -0.07
  Sales, Orders & Inventories -0.03 -0.04 0.02 -0.13 0.02 0.05 -0.01
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