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Economy in Brief

Chicago Fed National Activity Index Increases in March
by Tom Moeller  April 22, 2021

• Activity recovers following severe winter storms in February. 

• Production, personal spending & housing strengthen following earlier month's declines.

The Federal Reserve Bank of Chicago's National Activity Index increased to 1.71 during March after weakening to -1.20 in February, revised from -1.09.

The three-month moving average, which smoothes out the m/m volatility in the index, bounced back last month to 0.54, after falling to 0.07 in February. During the last 20 years, there has been a 92% correlation between the Chicago Fed Index and quarterly growth in real GDP.

A rise in the Production & Income component led the improvement in the total, rising to 0.63 from -1.04 in February. The Personal Consumption & Housing series rose to 0.63 in March from -0.21 in the prior month. The index followed four negative readings in five months. The Sales, Orders & Inventories series improved to 0.11 from -0.06, but remained below the high of 0.20 averaged in the third quarter of last year. The Employment, Unemployment & Income series increased to 0.34 from 0.12, which was the highest level in three months. The CFNAI diffusion index, which measures the breadth of movement in the components, improved to 0.40 from 0.22, as 70 of the 85 component series contributed positively and 15 made negative contributions to the index overall.

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.

These figures are available in Haver's SURVEYS database.

Federal Reserve Bank of Chicago Mar Feb Jan Mar'20 2020 2019 2018
Chicago Fed National Activity Index (+ = Growth Above Trend) 1.71 -1.20 1.10 -4.47 -0.49 -0.15 0.11
   Production & Income 0.63 -1.04 0.31 -1.86 -0.14 -0.10 0.06
   Employment, Unemployment & Hours 0.34 0.12 0.08 -1.23 -0.31 0.00 0.08
   Personal Consumption & Housing 0.63 -0.21 0.41 -0.61 -0.04 -0.02 -0.04
   Sales, Orders & Inventories 0.11 -0.06 0.30 -0.78 -0.01 -0.03 0.01
CFNAI 3-Month Moving Average 0.54 0.07 0.59 -1.50 -- -- --
CFNAI Diffusion Index 0.40 0.22 0.37 -0.30 0.20 -0.14 0.16
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