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Economy in Brief

Chicago Fed National Activity Index Suggests Growth Picked Up in February
by Tom Moeller  March 23, 2020

The Chicago Federal Reserve Bank indicated that these February figures likely were not much influenced by the COVID-19 outbreak.

It reported that its National Activity Index (CFNAI) improved to 0.16 last month from -0.33 in January, revised from -0.25. February's was the first positive reading in three months. The three-month moving average of the index eased m/m to -0.21, but still was improved from the low of -0.52 last April. During the last 20 years, there has been a 70% correlation between the index and the q/q change in real GDP.

The rise in the February index reflected a sharp rise in the Production & Income component to 0.11 from -0.34 in January. It was the first positive figure in three months. The Employment, Unemployment & Hours series edged higher to 0.05 from 0.01, the best reading since September 2019. Working the other way, the Personal Consumption & Housing gauge slipped to 0.02 from 0.03, which was the highest level in 12 months. The Sales, Orders and Inventories measure eased to -0.03 from -0.02.

The diffusion index of the CFNAI, which measures the breadth of component change, fell to -0.20.

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.

These figures are available in Haver's SURVEYS database.

Federal Reserve Bank of Chicago Feb Jan Dec Feb '19 2019 2018 2017
National Activity Index (+ = Growth Above Trend) 0.16 -0.33 -0.46 -0.65 -0.25 0.16 0.16
   Production & Income 0.11 -0.34 -0.32 -0.30 -0.17 0.09 0.08
   Employment, Unemployment & Hours 0.05 0.01 -0.08 0.06 -0.01 0.10 0.07
   Personal Consumption & Housing 0.02 0.03 0.00 -0.14 -0.03 -0.06 -0.05
   Sales, Orders & Inventories -0.03 -0.02 -0.07 -0.07 -0.04 0.03 0.05
  3-Month Moving Average -0.21 -0.11 -0.22 -0.25 -- -- --
Diffusion Index -0.20 -0.11 -0.19 -0.16 -0.16 0.15 0.08
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