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Economy in Brief

Chicago Fed National Activity Index Suggests Improved Economic Growth
by Tom Moeller  February 22, 2016

The Chicago Federal Reserve reported that its National Activity Index (CFNAI) during January rose to 0.28 from -0.34 in December, revised from -0.22. It was the first positive figure in six months. The 3-month moving average improved to -0.15, but still suggested economic growth 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 0.27 was positive for the first time since July. The three-month average improved just slightly. Employment, Unemployment & Hours eased slightly m/m, but continued to trend higher. Sales, Orders & Inventories remained negative for the fifth month in the last six. The Personal Consumption & Housing figure held steady m/m at -0.08, yet continued its upward trend. The Fed reported that 39 of the 85 component series made positive contributions to the total while 46 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.

Is There a Case for Inflation Overshooting? from the Federal Reserve Bank of San Francisco is available here.

Chicago Federal Reserve Bank Jan Dec Nov Jan '15 2015 2014 2013
National Activity Index (percent) 0.28 -0.34 -0.39 -0.14 -0.14 0.21 -0.05
 3-Month Moving Average -0.15 -0.30 -0.20 0.20 -- -- --
  Personal Consumption & Housing -0.08 -0.08 -0.04 -0.09 -0.09 -0.11 -0.15
  Employment, Unemployment & Hours 0.12 0.16 0.14 0.14 0.08 0.18 0.10
  Production & Income 0.27 -0.38 -0.40 -0.15 -0.12 0.11 -0.02
  Sales, Orders & Inventories -0.03 -0.04 -0.09 -0.04 -0.01 0.04 0.02
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