Global| Nov 22 2010Chicago Fed Index Recovers Modestly
by:Tom Moeller
|in:Economy in Brief
Summary
The Chicago Fed National Activity Index (CFNAI) improved last month to its highest level since August. Regardless, the index remained down sharply since its March peak, suggesting that the economy's recovery has lost forward momentum. [...]
The Chicago Fed National Activity Index (CFNAI) improved last month to its highest level since August. Regardless, the index remained down sharply since its March peak, suggesting that the economy's recovery has lost forward momentum. The m/m gain to -0.28 was from an upwardly revised -0.52 during September. The three-month moving average of the index, which smoothes out some of the series' volatility, deteriorated to -0.46, its lowest level since November of last year.
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 a 78% correlation with the quarterly growth in real GDP.
The CFNAI is a weighted average of 85 indicators of economic activity. The Chicago Fed indicated that October improvement resulted from increases in the labor market indicators as well as the production and income measures. The other component series were roughly stable. Forty-one of the 85 individual indicators made positive contributions to the index in October, while 44 had a negative effect. The Fed also indicated that 45 indicators improved from September to October, while 39 indicators deteriorated and one was unchanged.
In a separate survey, the Chicago Fed indicated that its Midwest manufacturing index during September held roughly steady m/m but that was down slightly from its July high, its highest since December 2008. Indicators for the steel and machinery sectors fell but autos and the resource sector rose. The Chicago Federal Reserve figures are available in Haver's SURVEYS database.
Rebalancing the Global Recovery is Friday's speech by Fed Chairman Ben S. Bernanke and it can be found here.
| Chicago Federal Reserve Bank | Oct | Sep | Aug | Oct'09 | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|
| CFNAI | -0.28 | -0.52 | -0.57 | -0.65 | -0.86 | -1.85 | -0.29 |
| 3-Month Moving Average | -0.46 | -0.33 | -0.35 | -0.68 | -- | -- | -- |
| Personal
Consumption & Housing |
-0.43 | -0.41 | -0.37 | -0.41 | -0.44 | -0.29 | -0.09 |
| Employment,
Unemployment & Hours |
0.03 | -0.06 | -0.07 | -0.54 | -0.78 | -0.67 | -0.14 |
| Production & Income | 0.08 | -0.12 | -0.04 | 0.06 | -0.21 | -0.60 | -0.05 |
| Sales, Orders & Inventories | 0.05 | 0.08 | -0.10 | 0.05 | -0.11 | -0.28 | -0.03 |
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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