Global| Oct 28 2019Chicago Fed National Activity Index Falls Sharply
by:Tom Moeller
|in:Economy in Brief
Summary
The Federal Reserve Bank of Chicago reported that its National Activity Index declined to -0.45 during September from 0.15 in August, revised from 0.10. It was the lowest index level since April. The three-month moving average, which [...]
The Federal Reserve Bank of Chicago reported that its National Activity Index declined to -0.45 during September from 0.15 in August, revised from 0.10. It was the lowest index level since April. The three-month moving average, which smoothes out volatility in the monthly figures, fell to -0.24 last month versus -0.06 in August. The figure remained below the December 2017 high of 0.51. During the last twenty years, there has been a 70% correlation between the Chicago Fed Index and the q/q change in real GDP.
The National Activity Diffusion Index, which measures the breadth of movement in the monthly series, deteriorated to -0.25 from -0.10. That remained below the peak of 0.51 in December 2017.
Declines in each of the component series contributed to last month's fall in the National Activity Index. The Production & Income series led the declines, falling to -0.37 and reversing an August rise. It was the lowest level since April. The Personal Consumption & Housing Index eased to -0.04 and also reversed the prior month's improvement. The Sales, Orders & Inventories group eased to -0.02 from -0.01 and remained below the high of 0.21 reached in January. The Employment, Unemployment & Hours series slipped to -0.02 from -0.03. It has been moving sideways since May.
The CFNAI is a weighted average of 85 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 Chicago Federal Reserve figures are available in Haver's SURVEYS database.
| Chicago Federal Reserve Bank | Sep | Aug | Jul | Sep '18 | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| National Activity Index (percent) | -0.45 | 0.15 | -0.41 | 0.08 | 0.18 | 0.16 | -0.11 |
| 3-Month Moving Average | -0.24 | -0.06 | -0.15 | 0.27 | -- | -- | -- |
| Diffusion Index | -0.25 | -0.10 | -0.20 | 0.19 | 0.17 | 0.09 | -0.19 |
| Production & Income | -0.37 | 0.19 | -0.26 | 0.01 | 0.09 | 0.08 | -0.06 |
| Employment, Unemployment & Hours | -0.02 | -0.03 | -0.05 | 0.07 | 0.12 | 0.08 | 0.02 |
| Personal Consumption & Housing | -0.04 | 0.00 | -0.04 | -0.07 | -0.06 | -0.05 | -0.07 |
| Sales, Orders & Inventories | -0.02 | -0.01 | -0.05 | 0.08 | 0.02 | 0.05 | -0.01 |
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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