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Economy in Brief

Chicago Fed National Activity Index Pulls Back During November
by Tom Moeller  December 21, 2020

• Index suggests slower economic growth.

• Components broadly weaken.

Forward economic momentum retreated last month. The Federal Reserve Bank of Chicago's National Activity Index declined during November to 0.27 from 1.01 in October, revised from 0.83. The index level was the lowest of seven consecutive positive readings.

The three-month moving average, which smoothes out the m/m volatility in the index, fell in November to 0.56 from 0.85 in October. During the last 20 years, there has been a 76% correlation between the Chicago Fed Index and quarterly growth in real GDP.

Each of the four index components weakened last month. The Employment, Unemployment & Income series fell to its lowest level in the last six months. The Sales, Orders & Inventories also fell sharply. The Production & Income series reversed much of October's improvement. The Personal Consumption & Housing series fell into negative territory. The diffusion index, which measures the breadth of movement in the components, decreased to 0.53 from 0.62 as 64 of the 85 components deteriorated.

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 Nov Oct Sep Nov '19 2019 2018 2017
Chicago Fed National Activity Index (+ = Growth Above Trend) 0.27 1.01 0.40 0.29 -0.14 0.12 0.13
   Production & Income 0.14 0.36 -0.03 0.28 -0.11 0.07 0.06
   Employment, Unemployment & Hours 0.15 0.45 0.33 0.01 0.01 0.08 0.06
   Personal Consumption & Housing -0.09 0.02 0.09 -0.02 -0.02 -0.04 -0.03
   Sales, Orders & Inventories 0.07 0.17 0.02 0.02 -0.03 0.01 0.04
CFNAI 3-Month Moving Average 0.56 0.85 1.40 -0.15 -- -- --
CFNAI Diffusion Index 0.53 0.62 0.59 -0.14 -0.11 0.15 0.13
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