Global| Sep 28 2009Chicago Fed Index Lower Last Month But Trend Still Firm
by:Tom Moeller
|in:Economy in Brief
Summary
The Chicago Federal Reserve Bank reported that its National Activity Index slipped last month after having improved sharply from the January low. The reading of -0.90 was down from -0.56 during July but both figures were well improved [...]
The Chicago Federal Reserve Bank reported that its National
Activity Index slipped last month after having improved sharply from
the January low. The reading of -0.90 was down from -0.56 during July
but both figures were well improved from the series' low of -4.13
reached this past January. Since 1970 there has been a 74% correlation
between the level of the index and the q/q change in real GDP but
during the last ten years that correlation has risen to 80%.
The three-month moving average which smoothes out some of the volatility of the index improved to its highest level since June of '08.
An index level at or below -0.70 typically has indicated negative U.S. economic growth. A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of roughly 3%. The complete CFNAI report is available here.
The production and employment components made smaller positive
contributions to the August CFNAI than during July while the
consumption, housing, sales, orders and inventories categories
improved. Overall, thirty-one of the index components had a positive
influence while 54 made a negative contribution.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production & income, the labor market, personal consumption & housing, manufacturing & trade sales, and inventories & orders.
In a separate survey, the Chicago Fed indicated that its Midwest manufacturing index improved slightly during July but remained near its lowest since late-1993. Indicators for the auto sector improved but for the steel and machinery sectors the series fell to new cycle lows. The Chicago Federal Reserve figures are available in Haver's SURVEYS database.
Friday's speech by Fed Governor Kevin Warsh titled Longer Days, Fewer Weekends can be found here.
| Chicago Fed | August | July | August '08 | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|
| CFNAI | -0.90 | -0.56 | -2.01 | -1.77 | -0.35 | 0.05 |
| 3-Month Moving Average | -1.09 | -1.61 | -1.42 | -- | -- | -- |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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