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Economy in Brief

Chicago Fed National Activity Index Indicates Economic Improvement
by Tom Moeller  May 19, 2016

The National Activity Index from the Federal Reserve Bank of Chicago increased to 0.10 during April, the first positive reading since January. It still suggested, however, that economic growth was slightly below trend. At -0.22, the three month moving average has been in negative territory since February 2015. During the last ten years, there has been a 77% correlation between the Chicago Fed Index and the q/q change in real GDP.

Each of the component series improved last month. The Production & Income reading moved up sharply to 0.19, the highest point in nine months. The Personal Consumption & Housing figure rose to -0.07, its best level this year. The Employment, Unemployment & Hours figure rose to a still-depressed -0.02. The Sales, Orders & Inventories figure was fairly steady at 0.00. The Fed reported that 45 of the 85 component series made positive contributions to the total while 40 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 Apr Mar Feb Apr '15 2015 2014 2013
National Activity Index (percent) 0.10 -0.55 -0.20 0.17 -0.17 0.16 -0.08
 3-Month Moving Average -0.22 -0.18 -0.08 -0.14 -- -- --
  Personal Consumption & Housing -0.07 -0.11  -0.05 -0.06 -0.09 -0.11 -0.15
  Employment, Unemployment & Hours -0.02 -0.04 0.05 0.15 0.07 0.18 0.09
  Production & Income 0.19 -0.39 -0.16 -0.03 -0.14 0.06 -0.04
  Sales, Orders & Inventories 0.00 -0.01 -0.03 0.12 -0.02 0.04 0.02
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