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Economy in Brief

Chicago Fed National Activity Index Indicates Subpar Economic Growth
by Tom Moeller  January 22, 2016

The Chicago Federal Reserve reported that its National Activity Index (CFNAI) during December remained negative at -0.22 following -0.36 in November, revised from -0.30. The 3-month moving average declined to -0.24, its weakest reading since March. It indicated that economic growth was below its long-term trend. During the last ten years, there has been a 77% correlation between the Chicago Fed Index and the q/q change in real GDP.

Movement in the four component series of the overall index was mixed last month. The Production & Income reading at -0.26 remained near its lowest level since January 2014. Sales, Orders & Inventories remained little-changed at -0.02, negative for the fourth month in the last five. The Personal Consumption & Housing figure eased to -0.07, though that remained near the cycle's high. Employment, Unemployment and Hours held at the 2015 high of 0.12. The Fed reported that 35 of the 85 component series made positive contributions to the total while 50 made negative contributions.

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 Dec Nov Oct Dec'14 2015 2014 2013
National Activity Index (percent) -0.22 -0.36 -0.14 0.13 -0.13 0.21 -0.05
 3-Month Moving Average -0.24 -0.19 -0.16 0.40 -- -- --
  Personal Consumption & Housing -0.07 -0.05 -0.12 -0.11 -0.09 -0.11 -0.15
  Employment, Unemployment & Hours 0.12 0.12 0.07 0.22 0.07 0.18 0.10
  Production & Income -0.26 -0.40 -0.03 -0.08 -0.11 0.11 -0.02
  Sales, Orders & Inventories -0.02 -0.03 -0.07 0.09 -0.01 0.04 0.02
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