Global| May 26 2020Chicago Fed National Activity Index Signals Intensified Recession
by:Tom Moeller
|in:Economy in Brief
Summary
• Effects of COVID-19 outbreak increasingly restrains economy. • Contraction in activity is broad-based. The National Activity Index (CFNAI) weakened to -16.74 during April from -4.97 in March, revised from -4.19. It was a record [...]
• Effects of COVID-19 outbreak increasingly restrains economy.
• Contraction in activity is broad-based.
The National Activity Index (CFNAI) weakened to -16.74 during April from -4.97 in March, revised from -4.19. It was a record negative reading. The three-month moving average of the index fell m/m to -7.22, also a record decline. During the last 20 years, there has been a 71% correlation between the Chicago index and the q/q change in real GDP.
Each of the four components of the index remained sharply negative last month. The Employment, Unemployment & Hours series declined to -9.06 indicating extreme labor market pressure. The Production & Income figure also fell to a record low of -5.63. The Personal Consumption & Housing gauge held steady at a record low of -0.81. The Sales, Orders and Inventories index slipped to -1.24, down from the previous record low reached in March.
The diffusion index of the CFNAI, which measures the breadth of component change, fell to -0.55, its lowest reading since June 2009.
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.
These figures are available in Haver's SURVEYS database.
| Federal Reserve Bank of Chicago | Apr | Mar | Feb | Apr '19 | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| National Activity Index (+ = Growth Above Trend) | -16.74 | -4.97 | 0.05 | -0.69 | -0.15 | 0.15 | 0.17 |
| Production & Income | -5.63 | -2.31 | -0.02 | -0.44 | -0.11 | 0.09 | 0.08 |
| Employment, Unemployment & Hours | -9.06 | -1.06 | 0.06 | 0.04 | 0.02 | 0.10 | 0.07 |
| Personal Consumption & Housing | -0.81 | -0.80 | -0.02 | -0.03 | -0.02 | -0.05 | -0.04 |
| Sales, Orders & Inventories | -1.24 | -0.81 | 0.03 | -0.26 | -0.04 | 0.01 | 0.05 |
| 3-Month Moving Average | -7.22 | -1.69 | -0.12 | -0.37 | -- | -- | -- |
| Diffusion Index | -0.55 | -0.32 | -0.09 | -0.25 | -0.06 | 0.21 | 0.19 |
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.
More Economy in Brief
