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Economy in Brief

Chicago Fed National Index Signals Easing in Recession in May
by Tom Moeller  June 22, 2020

• Indicators of modest improvement were broad-based.

• Employment cutbacks abate.

The Federal Reserve Bank of Chicago reported that the National Activity Index (CFNAI) improved to 2.61 during May from a record negative reading a -17.89 in April, revised from -16.74. The three-month moving average of the index improved slightly m/m to -6.65 from -7.50 in April. 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 turned slightly positive last month. The Employment, Unemployment & Hours series rose to 1.53 from its extremely negative reading of -9.06. The Production & Income figure also improved to 0.89 from its record low of -5.94. The Personal Consumption & Housing gauge was positive for the first time in four months at 0.17. The Sales, Orders and Inventories index also turned positive at 0.02, after a record April decline.

The diffusion index of the CFNAI, which measures the breadth of component change, rose to -0.43 but remained at the lowest level 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 May Apr Mar May '19 2019 2018 2017
National Activity Index (+ = Growth Above Trend) 2.61 -17.89 -4.67 -0.08 -0.14 0.14 0.16
   Production & Income 0.89 -5.94 -2.13 0.01 -0.11 0.08 0.08
   Employment, Unemployment & Hours 1.53 -9.06 -1.08 -0.01 0.01 0.09 0.07
   Personal Consumption & Housing 0.17 -1.30 -0.57 -0.02 -0.02 -0.04 -0.04
   Sales, Orders & Inventories 0.02 -1.59 -0.88 -0.06 -0.03 0.01 0.05
  3-Month Moving Average -6.65 -7.50 -1.57 -0.23 -- -- --
Diffusion Index -0.43 -0.58 -0.34 -0.13 -0.05 0.20 0.19
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