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Economy in Brief

Chicago Fed National Activity Index Increases During January
by Tom Moeller  February 22, 2021

• Index suggests improvement in economic growth.

• Production & income remain strong while personal spending rebounds.

The Federal Reserve Bank of Chicago's National Activity Index increased to 0.66 during January from December's 0.41, revised from 0.52. The index has been positive since May of last year and the latest reading was the highest in three months.

The three-month moving average, which smooths out the m/m volatility in the index, eased last month to 0.47 from 0.60 in December. During the last 20 years, there has been a 91% correlation between the Chicago Fed Index and quarterly growth in real GDP.

The Personal Consumption & Housing component increased to 0.35 following two months in negative territory. It was the highest reading since last June. The Production & Income component of the index remained positive last month with a reading of 0.28, though that was down from 0.61 averaged in the third quarter. The Sales, Orders & Inventories slipped to 0.02, well below the Q3 average of 0.20. The Employment, Unemployment & Income series eased to 0.01, its lowest level in nine months. The diffusion index, which measures the breadth of movement in the components, eased to 0.34 from 0.49 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 Jan Dec Nov Jan'20 2020 2019 2018
Chicago Fed National Activity Index (+ = Growth Above Trend) 0.66 0.41 0.34 -0.05 -0.48 -0.15 0.11
   Production & Income 0.28 0.37 0.25 -0.17 -0.13 -0.11 0.06
   Employment, Unemployment & Hours 0.01 0.05 0.15 0.06 -0.31 0.00 0.08
   Personal Consumption & Housing 0.35 -0.06 -0.08 0.05 -0.03 -0.02 -0.04
   Sales, Orders & Inventories 0.02 0.05 0.02 0.02 -0.01 -0.03 0.01
CFNAI 3-Month Moving Average 0.47 0.60 0.60 -0.01 -- -- --
CFNAI Diffusion Index 0.34 0.49 0.51 -0.01 0.20 -0.13 0.17
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