Chicago Fed National Activity Index Turns Negative in December
by:Tom Moeller
|in:Economy in Brief
Summary
- First negative reading since April 2021.
- Production & personal consumption again lead downturn.
- Trend level of total index weakens.
The Chicago Fed National Activity Index (CFNAI) dropped to -0.15 during December from 0.44 in November, revised from 0.37. In 2021, the index improved to 0.33 from -0.48 in 2020.
The index's three-month moving average eased in December to 0.33 from 0.40. During the last 10 years, there has been an 75% correlation between the change in the Chicago Fed Index and quarterly growth in real GDP.
The Personal Consumption & Housing component moved lower to -0.19 from -0.02 in November. The Production & Income component weakened to -0.13 from 0.25 in November. The Employment, Unemployment & Hours component eased to 0.13 from 0.16. The Sales, Orders & Inventories index slipped to 0.03 from 0.05 in November.
The CFNAI diffusion index, which measures the breadth of movement in the component series, fell to 0.37 in December from 0.42 in November. The diffusion index averaged 0.28 in 2021, up from 0.19 in 2020.
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. The CFNAI was constructed using data available as of October 25, 2021. Fifty 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.
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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