Global| May 23 2011Chicago Fed Index Provides Further Evidence of Momentum Lost
by:Tom Moeller
|in:Economy in Brief
Summary
The list of indicators suggesting that the economy's forward momentum has waned continues to lengthen. The Chicago Fed reported that its National Activity Index (CFNAI) retraced its earlier improvement and fell to -0.45 in April from [...]
The list of indicators suggesting that the economy's forward momentum
has waned continues to lengthen. The Chicago Fed reported that its National Activity Index (CFNAI)
retraced its earlier improvement and fell to -0.45 in April from a
little-revised 0.32 in March. The three-month moving average of the index, which smoothes out some of
the series' volatility, slipped to -0.12, the first negative reading since
December. During
the last ten years there has been an 81% correlation between the index and
the Q/Q change in real GDP.
Three of the component series weakened in April. The production & income series turned sharply negative, falling to the lowest level since the recession's end. Employment, unemployment & hours dropped to the lowest since October while sales, orders & inventories slipped. Personal consumption remained negative but relatively stable.
The CFNAI is a weighted average of 85 indicators of economic activity. An index level at or below -0.70 typically has indicated negative U.S. economic growth. A zero value of the CFNAI suggests that the economy is expanding at its historical trend rate of growth. During the last ten years it's had an 77% correlation with the quarterly growth in real GDP.
A separate index covering just Midwest manufacturing activity jumped in March to its highest level in over ten years as both the factory and service sectors improved. The Chicago Federal Reserve figures are available in Haver's SURVEYS database.
Explaining the recent decline in the unemployment rate from the Federal Reserve Bank of Chicago is available here.
| Chicago Federal Reserve Bank | Apr | Mar | Feb | Apr'10 | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| CFNAI | -0.45 | 0.32 | -0.23 | 0.34 | -0.06 | -1.59 | -1.93 |
| 3-Month Moving Average | -0.12 | 0.08 | 0.13 | 0.15 | -- | -- | -- |
| Personal Consumption & Housing | -0.39 | -0.39 | -0.40 | -0.33 | -0.35 | -0.40 | -0.26 |
| Employment, Unemployment & Hours | 0.06 | 0.24 | 0.42 | 0.33 | 0.03 | -0.81 | -0.67 |
| Production & Income | -0.16 | 0.31 | -0.05 | 0.25 | 0.21 | -0.26 | -0.70 |
| Sales, Orders & Inventories | 0.04 | 0.15 | -0.21 | 0.09 | 0.06 | -0.12 | -0.29 |
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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