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Economy in Brief

Chicago Fed National Activity Index Signals Recession
by Tom Moeller  April 20, 2020

• The Federal Reserve Bank of Chicago indicated that the economy entered a downturn in the wake of the COVID-19 outbreak.

The National Activity Index (CFNAI) declined to -4.19 during March from 0.06 in February, revised from 0.16. The three-month moving average of the index fell m/m to -1.47, its weakest level since June 2009. During the last 20 years, there has been a 71% correlation between the Chicago index and the q/q change in real GDP.

Each of the four component series of the index turned negative last month. The Production & Income series fell to a record low of -2.72. The Employment, Unemployment & Hours series declined to -1.23, the weakest reading since April 2009. The Personal Consumption & Housing gauge fell to -0.19, the lowest level since December 2018. The Sales, Orders and Inventories of -0.05 compared to -0.06 in February.

The diffusion index of the CFNAI, which measures the breadth of component change, fell sharply to -0.32, its lowest reading since May 2016.

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.

Do Stay-at-Home Orders Cause People to Stay at Home? Effects of Stay-at-Home Orders on Consumer Behavior from the Federal Reserve Bank of Chicago is available here.

Federal Reserve Bank of Chicago Mar Feb Jan Mar '19 2019 2018 2017
National Activity Index (+ = Growth Above Trend) -4.19 0.06 -0.27 -0.04 -0.23 0.15 0.17
   Production & Income -2.72 0.06 -0.30 -0.03 -0.16 0.10 0.09
   Employment, Unemployment & Hours -1.23 0.07 0.04 0.02 -0.01 0.10 0.07
   Personal Consumption & Housing -0.19 -0.02 0.03 0.02 -0.03 -0.06 -0.05
   Sales, Orders & Inventories -0.05 -0.06 0.04 -0.05 -0.04 0.02 0.06
  3-Month Moving Average -1.47 -0.20 -0.06 -0.24 -- -- --
Diffusion Index -0.32 -0.21 -0.07 -0.20 -0.15 0.16 0.09
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