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Economy in Brief

Chicago Fed National Activity Index Signals Intensified Recession
by Tom Moeller  May 26, 2020

• Effects of COVID-19 outbreak increasingly restrains economy.

• Contraction in activity is broad-based.

The National Activity Index (CFNAI) weakened to -16.74 during April from -4.97 in March, revised from -4.19. It was a record negative reading. The three-month moving average of the index fell m/m to -7.22, also a record decline. 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 components of the index remained sharply negative last month. The Employment, Unemployment & Hours series declined to -9.06 indicating extreme labor market pressure. The Production & Income figure also fell to a record low of -5.63. The Personal Consumption & Housing gauge held steady at a record low of -0.81. The Sales, Orders and Inventories index slipped to -1.24, down from the previous record low reached in March.

The diffusion index of the CFNAI, which measures the breadth of component change, fell to -0.55, its lowest reading since June 2009.

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 Apr Mar Feb Apr '19 2019 2018 2017
National Activity Index (+ = Growth Above Trend) -16.74 -4.97 0.05 -0.69 -0.15 0.15 0.17
   Production & Income -5.63 -2.31 -0.02 -0.44 -0.11 0.09 0.08
   Employment, Unemployment & Hours -9.06 -1.06 0.06 0.04 0.02 0.10 0.07
   Personal Consumption & Housing -0.81 -0.80 -0.02 -0.03 -0.02 -0.05 -0.04
   Sales, Orders & Inventories -1.24 -0.81 0.03 -0.26 -0.04 0.01 0.05
  3-Month Moving Average -7.22 -1.69 -0.12 -0.37 -- -- --
Diffusion Index -0.55 -0.32 -0.09 -0.25 -0.06 0.21 0.19
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