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Economy in Brief

Chicago Fed National Activity Index Falls in August
by Winnie Tapasanun  September 23, 2021

• Despite its decline in August, CFNAI still indicates above-average growth.

• Three of four components decrease, but all four show positive readings.

The Chicago Fed National Activity Index (CFNAI) fell to 0.29 in August after rising to 0.75 in July (revised up from 0.53), according to the Federal Reserve Bank of Chicago, suggesting a slower but still above-average growth.

The index's three-month moving average (CFNAI-MA3), which smooths out the m/m volatility in the index, increased to 0.43 in August, a three-month high, from 0.36 in July. During the last 10 years, there has been 98% correlation between the level of the Chicago Fed Index and quarterly growth in real GDP.

The Production & Income index declined to 0.11 in August after rising to 0.40 in July. The Employment, Unemployment & Hours component decreased to 0.12, the lowest level since April, from 0.38. The Sales, Orders & Inventories reading slipped to 0.03, a three-month low, from 0.07. In contrast, the Personal Consumption & Housing index rebounded to 0.03, the highest level since March, from -0.09.

The CFNAI diffusion index, which measures the breadth of movement in the component series, eased to 0.30 in August from 0.34 in July. Forty-nine of the 85 component series contributed positively and 36 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. The CFNAI was constructed using data available as of September 21, 2021. At that time, August data for 50 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index.

These figures are available in Haver's SURVEYS database.

Federal Reserve Bank of Chicago Aug Jul Jun Aug'20 2020 2019 2018
Chicago Fed National Activity Index (+ = Growth Above Trend) 0.29 0.75 0.24 1.21 -0.47 -0.20 0.05
   Production & Income 0.11 0.40 -0.04 0.43 -0.13 -0.13 0.02
   Employment, Unemployment & Hours 0.12 0.38 0.15 0.72 -0.31 0.00 0.08
   Personal Consumption & Housing 0.03 -0.09 0.02 0.01 -0.04 -0.02 -0.04
   Sales, Orders & Inventories 0.03 0.07 0.11 0.05 0.00 -0.05 0.00
CFNAI 3-Month Moving Average 0.43 0.36 0.07 3.29 -- -- --
CFNAI Diffusion Index 0.30 0.34 0.09 0.74 0.19 -0.18 0.05
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