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Economy in Brief

Chicago Fed Index Turns Positive
by Tom Moeller  April 29, 2011

The Chicago Fed reported that its National Activity Index (CFNAI) improved to a positive 0.26 last month. The gain was versus upwardly revised, positive readings this year that previously were reported as negative. Nevertheless, the index remained down from its March '10 peak. The three-month moving average of the index, which smoothes out some of the series' volatility, slipped to 0.20 from is early-2010 high. During the last ten years there has been an 81% correlation between the index and the Q/Q change in real GDP.

March strength in the production & income component offset the negative personal consumption & housing series. Also, the jobs figure fell m/m.

The CFNAI is a weighted average of 85 indicators of economic activity. An index level at or below -0.70 typically has indicated negative U.S. economic growth. A zero value of the CFNAI suggests that the economy is expanding at its historical trend rate of growth. During the last ten years it's had an 77% correlation with the quarterly growth in real GDP.

A separate index covering just Midwest manufacturing activity jumped to its highest level since October 2008 due to broad-based improvement amongst sectors, notably autos. The Chicago Federal Reserve figures are available in Haver's SURVEYS database.

Output Gaps: Uses and Limitations from the Federal Reserve Bank of Philadelphia can be found here

Chicago Federal Reserve Bank Mar Feb Jan Mar'10 2010 2009 2008
CFNAI 0.26 0.16 0.18 0.51 -0.06 -1.59 -1.93
 3-Month Moving Average 0.20 0.27 0.15 0.05 -- -- --
  Personal Consumption & Housing -0.39 -0.42 -0.37 -0.28 -0.35 -0.40 -0.26
  Employment, Unemployment & Hours 0.18 0.42 0.09 0.19 0.03 -0.81 -0.67
  Production & Income 0.39 0.11 0.26 0.30 0.22 -0.26 -0.70
  Sales, Orders & Inventories 0.08 0.05 0.24 0.30 0.06 -0.12 -0.29
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