Chicago Fed’s National Activity Index Turns Negative in April
by:Tom Moeller
|in:Economy in Brief
Summary
- Latest reading follows two positive figures.
- Three of four components are negative; one is unchanged.
- Three-month trend is steady
The National Activity Index (CFNAI), reported by the Federal Reserve Bank of Chicago, stood at -0.25 during April after 0.03 in March, revised from -0.03, and 0.37 in February, revised from 0.24.
The index's three-month moving average, which smooths out the m/m volatility in the index, held steady in April at 0.05, down from 0.16 in February. This reading compares to a value of zero, which equals trend real GDP growth. Research at the Chicago Fed indicates that an average reading of -0.70 or below is consistent with the economy being in a recession.
The April reading reflected a negative contribution from the Production & Income index which fell to -0.18 from -0.07 in March and +0.29 in February. The Personal Consumption & Housing contribution of -0.04 in April compared to +0.09 in March and -0.01 in February. The Sales, Orders & Inventories index series fell to -0.04 in April from 0.06 in March and 0.13 in February. The Employment, Unemployment & Hours index held steady last month after contributing -0.05 in March and -0.03 in February
The CFNAI Diffusion Index, which measures the breadth of change in the component series and is also a three-month moving average, fell to -0.05 in April from -0.02 in March and +0.17 in February. A reading of zero indicates that all of the indicators are growing at their long-term average. Thirty of the 85 individual data series made negative contributions to the total in April while 55 contributed negatively.
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.
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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