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Economy in Brief

Chicago Fed Index Improves Modestly
by Tom Moeller April 29, 2010

Weather constraints on U.S. economic growth abated last month, according to the Chicago Fed National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago. Their index rose to -0.07 and recovered all of its February decline. The increase added to earlier gains from the series' low of -4.14 reached in January '09. During the last ten years the has been a 76% correlation between the index level and the q/q change in real GDP.

The three-month moving average of the index, which smoothes out some of the series' volatility, also improved to -0.18.

An index level at or below -0.70 typically has indicated negative U.S. economic growth. A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of roughly 3.0%. The complete CFNAI report is available here.

The Chicago Fed indicated that rebounds in the employment and in the production components contributed to the total index improvement. Overall, 50 of the 85 individual indicators made positive contributions to the index while 34 made negative contributions. The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production & income, the labor market, personal consumption & housing, manufacturing & trade sales, and inventories & orders.

In a separate survey, the Chicago Fed indicated that its Midwest manufacturing index improved during February to its highest level since December 2008. Indicators for the auto, steel, machinery and resource sectors each rose. The Chicago Federal Reserve figures are available in Haver's SURVEYS database.

Chicago Fed March February January March '09 2009 2008 2007
CFNAI -0.07 -0.44 -0.05 -3.37 -1.62 -1.79 -0.35
  3-Month Moving Average -0.18 -0.31 -0.11 -3.33 -- -- --
    Personal Consumption & Housing  -0.42 -0.41 -0.45 -0.56 -0.49 -0.32 -0.09
    Employment, Unemployment & Hours 0.12 -0.13 0.05 -1.45 -0.76 -0.67 -0.15
    Production & Income 0.18 0.04 0.44 -0.99 -0.24 -0.56 -0.05
    Sales, Inventories & Orders 0.06 0.06 -0.06 -0.38 -0.14 -0.25 -0.06
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