Haver Analytics
Haver Analytics
| Feb 23 2023

Chicago Fed National Activity Index Rises in January; Highest Since July

  • January CFNAI at 0.23, the first positive reading following three straight negative readings.
  • Three of four components increase, but the Sales, Orders & Inventories component falls for the fourth time in five months.
  • CFNAI-MA3 rebounds in Jan. after three consecutive m/m drops.

The Chicago Fed National Activity Index (CFNAI) was at 0.23 in January, up from -0.46 in December (-0.49 initially) and -0.56 in November (-0.51 previously), according to the Federal Reserve Bank of Chicago. The January reading was the second successive m/m rise to the highest level since July but down from 0.43 in January 2022.

The index's three-month moving average (CFNAI-MA3), which smooths out the m/m volatility in the index, rebounded to -0.26 in January, the first monthly increase since September, from -0.34 in December (-0.33 initially). During the last 10 years, there has been a 71% correlation between the change in the Chicago Fed Index and quarterly growth in real GDP. The CFNAI-MA3 is expressed in standard deviation units from zero (with a value of zero defined as trend real GDP growth); a reading of -0.70 or below is consistent with the economy being in a recession. Thus, the January reading does not indicate that the economy is currently in a recession; however, a one-month rebound does not make a trend with three consecutive monthly declines (in October, November and December) pointing to increased recession risk.

The Production & Income index recovered to 0.04 in January from -0.56 in December, registering the third positive reading since July and marginally up from 0.02 last January. The Employment, Unemployment & Hours index rose to 0.12, the highest level since July, from December’s 0.09; it was slightly up from 0.08 last January. The Personal Consumption & Housing index increased to 0.13 in January, a one-year high, from -0.06 in December; it was also 0.13 last January. In contrast, the Sales, Orders & Inventories index fell back to -0.06, the fourth monthly fall in five months, from December’s 0.07; it was down from 0.21 last January.

The CFNAI diffusion index, which measures the breadth of movement in the component series, improved to -0.10 in January after falling to -0.15 in December (-0.13 initially). The January reading was the first m/m increase since September but below 0.29 last January. Fifty-one of the 85 component series contributed positively while 34 made negative contributions to the index overall.

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 moves 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 CFNAI was constructed using data available as of February 21, 2023. January data for 51 of the 85 indicators had been published at that time. For all missing data, estimates were used in constructing the index.

The index is constructed by the Federal Reserve Bank of Chicago. These figures are available in Haver's SURVEYS database.

  • Winnie Tapasanun has been working for Haver Analytics since 2013. She has almost 20 years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations.   Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia.   A bilingual (English and Thai) with competency in French, Winnie loves to travel (25 countries so far) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.

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