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Economy in Brief

Chicago Fed National Activity Index Strengthens in July
by Tom Moeller  August 23, 2021

• Overall activity rebounds after easing in June.

• Three of four components recover.

The Federal Reserve Bank of Chicago reported that its National Activity Index rebounded to 0.53 during July after declining to -0.01 in June, revised from +0.09.

The three-month moving average, which smoothes out the m/m volatility in the index, improved to 0.23 last month after a minimal gain in June. During the last 10 years, there has been 98% correlation between the level of the Chicago Fed Index and quarterly growth in real GDP.

The Production & Income component rebounded to 0.38 last month from -0.09 in June. The Employment, Unemployment & Hours component strengthened to 0.30 in July after rising to 0.14 in June. The Sales, Orders & Inventories reading improved to 0.02 from -0.06. The Personal Consumption & Housing index of -0.15 in July was negative for the second month in the last three.

The CFNAI diffusion index, which measures the breadth of movement in the component series, rose to 0.28 from 0.05 in June. Fifty-six of the 85 component series contributed positively and 29 made negative contributions to the index overall.

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. The CFNAI was constructed using data available as of August 19, 2021. At that time, 51 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index.

These figures are available in Haver's SURVEYS database.

Federal Reserve Bank of Chicago Jul Jun May Jul'20 2020 2019 2018
Chicago Fed National Activity Index (+ = Growth Above Trend) 0.53 -0.01 0.15 2.66 -0.47 -0.20 0.05
   Production & Income 0.38 -0.09 0.31 1.35 -0.13 -0.13 0.02
   Employment, Unemployment & Hours 0.30 0.14 0.19 0.64 -0.31 -0.00 0.08
   Personal Consumption & Housing -0.15 0.01 -0.14 0.09 -0.04 -0.02 -0.04
   Sales, Orders & Inventories 0.02 -0.06 -0.21 0.58 0.00 -0.05 -0.00
CFNAI 3-Month Moving Average 0.23 0.01 0.79 4.43 -- -- --
CFNAI Diffusion Index 0.28 0.05 0.36 0.76 0.19 -0.18 0.05
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