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Economy in Brief

Chicago Fed National Activity Index Improves During December
by Tom Moeller  January 25, 2021

• Index suggests modest pickup in economic growth.

• Production & income strengthen.

The Federal Reserve Bank of Chicago's National Activity Index increased to 0.52 during December from November's 0.31, revised from 0.27. Despite the increase, the index remained near recent lows.

The three-month moving average, which smoothes out the m/m volatility in the index, rose last month to 0.44 from 0.13 in November. During the last 20 years, there has been a 91% correlation between the Chicago Fed Index and quarterly growth in real GDP.

Only the Production & Income component of the index rose last month with an increase to 0.44, the highest level since July. The Employment, Unemployment & Income series eased to 0.13, its lowest level in six months. The Sales, Orders & Inventories also slipped to 0.05 and matched its September low. At -0.09, the Personal Consumption & Housing series remained in negative territory for the second straight month. The diffusion index, which measures the breadth of movement in the components, eased to 0.54 from 0.55 as 53 of the 85 component series 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 Dec Nov Oct Dec '19 2020 2019 2018
Chicago Fed National Activity Index (+ = Growth Above Trend) 0.52 0.31 1.01 -0.26 -0.49 -0.14 0.11
   Production & Income 0.44 0.13 0.40 -0.18 -0.15 -0.11 0.06
   Employment, Unemployment & Hours 0.13 0.15 0.46 -0.03 -0.30 0.01 0.08
   Personal Consumption & Housing -0.09 -0.06 0.00 -0.01 -0.03 -0.02 -0.04
   Sales, Orders & Inventories 0.05 0.09 0.14 -0.04 -0.00 -0.03 0.01
CFNAI 3-Month Moving Average 0.61 0.59 0.86 -0.13 -- -- --
CFNAI Diffusion Index 0.54 0.55 0.60 -0.10 0.21 -0.11 0.16
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