Chicago Fed National Activity Index Declines Again in October
by:Tom Moeller
|in:Economy in Brief
Summary
- Broad-based weakening occurs in all components.
- Production & Income measure leads decline.
- Trend is deteriorating.
The Chicago Federal Reserve Bank reported that its National Activity Index (CFNAI) fell to -0.40 during October from -0.27 in September, revised from -0.28. It was the lowest figure in nine months and compared to a high of +0.39 reached in February. The three-month moving average of the index fell to -0.24 during October from -0.21 in September. The index has been consistently negative since late in 2022, suggesting below-trend economic growth. During the last 20 years, there has been a 91% correlation between the three-month index level and the q/q change in real GDP.
The report indicated deterioration in all categories used to construct the index in October.
The Production & Income category contributed -0.25 to the total in October after subtracting -0.23 in September. It remained up from a January low of -0.48, suggesting a lessening of negative pressure. The Employment, Unemployment & Hours series weakened sharply and contributed -0.12 in October versus -0.01 in September. It has been mostly negative since early last year. The Personal Consumption & Housing figure contributed -0.01 last month after adding 0.02 in September. It remained higher than the January low of -0.09. The Sales, Orders & Inventories figure contributed -0.02 last month versus -0.04 in September. These readings compare to a high of 0.11 in November of last year.
The diffusion index of the CFNAI, which measures the breadth of component change, fell to -0.26 in October from -0.22 in September. It compared to a low of -0.27 in October of last year and stands below the recent high of +0.25 in September 2022.
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.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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