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by Tom Moeller February 24, 2020
The Federal Reserve Bank of Chicago indicated that its National Activity Index (CFNAI) rose to -0.25 during January from -0.51 in December. The three-month moving average of the index gained to -0.09, the highest level since August. It was improved from the low of -0.52 in April. During the last 20 years, there has been a 70% correlation between the index and the q/q change in real GDP.
The CFNAI is a weighted average of 85 monthly 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 rise in the overall index last month was due to gains in each of the index components. The personal consumption & housing gauge rose to 0.03 which was the highest level in 12 months and improved from the lows last spring. Improvement in the other components was limited, except employment which rose to the highest level in three months. As a result, the diffusion index of the CFNAI, which measures the breadth of gain amongst the component series, rose just slightly to -0.16. It remained below the recent high of -0.06 reached August.
These figures are available in Haver's SURVEYS database.
| Federal Reserve Bank of Chicago | Jan | Dec | Nov | Jan '19 | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| National Activity Index (+ = Growth Above Trend) | -0.25 | -0.51 | 0.49 | -0.07 | -0.25 | 0.16 | 0.16 |
| Production & Income | -0.23 | -0.34 | 0.42 | -0.37 | -0.17 | 0.09 | 0.08 |
| Employment, Unemployment & Hours | -0.03 | -0.12 | 0.04 | 0.06 | -0.01 | 0.11 | 0.07 |
| Personal Consumption & Housing | 0.03 | 0.00 | -0.01 | 0.04 | -0.03 | -0.06 | -0.05 |
| Sales, Orders & Inventories | -0.02 | -0.06 | 0.03 | 0.21 | -0.04 | 0.03 | 0.05 |
| 3-Month Moving Average | -0.09 | -0.23 | -0.23 | 0.03 | -- | -- | -- |
| Diffusion Index | -0.16 | -0.25 | -0.19 | 0.05 | -0.17 | 0.16 | 0.08 |
