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Economy in Brief

Chicago Fed National Activity Index Recovers M/M; Trend Deteriorates
by Tom Moeller  December 24, 2018

The Federal Reserve Bank of Chicago reported that its November National Activity index increased to 0.22 following deterioration in October to 0.00, revised from 0.24. Working lower, however, was the three-month moving average to 0.12, its lowest point since July. During the last ten years, there has been a 77% correlation between the Chicago Fed Index and the q/q change in real GDP.

The National Activity Index Diffusion Index, which measures the breadth of movement in the monthly series, deteriorated to 0.06. That was the lowest level since September of last year and down from the peak of 0.35 in November of last year.

Monthly improvement in the November index was led by the Production and Income series to 0.08 from -0.09, though figure remained down substantially versus last year. The Sales, Orders and Inventories reading improved to 0.09, but remained below its earlier peak. The Personal Consumption & Housing reading showed minimal improvement m/m and remained negative. The Employment, Unemployment & Hours series deteriorated to 0.10 from 0.15. It has been moving sideways all year suggesting moderate growth in payrolls.

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.

The Chicago Federal Reserve figures are available in Haver's SURVEYS database.

Chicago Federal Reserve Bank Nov Oct Sep Nov '17 2017 2016 2015s
National Activity Index (percent) 0.22 0.00 0.15 0.35 0.13 -0.12 -0.26
 3-Month Moving Average 0.12 0.23 0.31 0.45 -- -- --
Diffusion Index 0.06 0.21 0.24 0.35 0.06 -0.20 -0.15
  Production & Income 0.08 -0.09 0.05 0.15 0.05 -0.07 -0.21
  Employment, Unemployment & Hours 0.10 0.15 0.05 0.09 0.08 0.02 0.07
  Personal Consumption & Housing -0.05 -0.04 -0.06 -0.02 -0.05 -0.07 -0.08
  Sales, Orders & Inventories 0.09 -0.02 0.11 0.13 0.05 -0.00 -0.04
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