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Economy in Brief

Chicago Fed National Activity Index Weakens in March
by Tom Moeller  April 25, 2022

• Two of four major components ease.

• Three-month moving average improves.

The Federal Reserve Bank of Chicago reported that the Chicago Fed National Activity Index (CFNAI) declined to 0.44 during March from 0.54 in February, revised from 0.51.

The index's three-month moving average improved to 0.57 in March from 0.43 in February because of a strong January. During the last 10 years, there has been 76% correlation between the change in the Chicago Fed Index and quarterly growth in real GDP.

The Employment, Unemployment & Hours component fell to 0.16 in March and reversed its February gain. The Production & Income index slipped to 0.27 from 0.30 in February, but it remained up from -0.13 in December. Working the other way, the Sales, Orders & Inventories reading rose to 0.06 last month after declining to -0.03 in February. The Personal Consumption & Housing index held steady last month at -0.04.

The CFNAI diffusion index, which measures the breadth of movement in the component series, rose to 0.45 in March from 0.31. Fifty-nine of the 85 component series contributed positively to the overall index and 26 contributed negatively.

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 March 17, 2022. February data for 50 of the 85 indicators had been published at that time. For all missing data, estimates were used in constructing the index.

The index is constructed by the Federal Reserve Bank of Chicago. These figures are available in Haver's SURVEYS database.

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