Chicago Fed National Activity Index Drops to a Negative Level in January
Summary
- CFNAI -0.03 in January vs. +0.18 in December.
- Two of four CFNAI components fall m/m and one makes a negative contribution.
- CFNAI-MA3 improves to +0.03, the highest since Oct. ’22; well above -0.70 (recession signal).
The Chicago Fed National Activity Index (CFNAI) was at -0.03 in January, down from +0.18 in December (+0.15 initially) and slightly up from -0.05 in November (-0.01 previously), today’s report from the Federal Reserve Bank of Chicago showed, indicating U.S. economic growth decreased for the month. The January CFNAI registered the first m/m fall since October and the seventh negative reading in eight months; it was below a high of +0.39 in February 2024 but up from -0.83 in January 2024.
The index's three-month moving average (CFNAI-MA3), which smooths out the m/m volatility in the index, rose to +0.03 in January from an unrevised -0.13 in December, posting the first positive reading and the highest since October 2022; it was also up from -0.25 in January 2024. The CFNAI-MA3 is expressed in standard deviation units from zero (with a value of zero defined as trend real GDP growth). Research at the Chicago Fed indicates that an average reading of -0.70 or below is consistent with the economy being in a recession. Therefore, the January reading suggests that the U.S. economy is not currently in a recession.
The January negative reading reflected m/m drops in two of the four CFNAI key components and one negative contribution. The Production & Income index contributed +0.03 in January, down from +0.19 in December; however, it was up from -0.48 in January 2024 and a low of -0.59 in December 2022. The contribution of the Personal Consumption & Housing index to the CFNAI fell to -0.14 in January, the lowest reading since February 2021, from +0.02 in December and November; it was also down from -0.08 in January 2024. The Employment, Unemployment & Hours index contributed +0.07 in January, the highest reading since January 2023, up from +0.01 in December; it was an improvement from -0.04 in January 2024. Meanwhile, the Sales, Orders & Inventories index made a neutral contribution (0.00) to the CFNAI in January, up from -0.04 in December and -0.23 in January 2024.
The CFNAI Diffusion Index, which measures the breadth of change in the component series and is also a three-month moving average, rose to +0.10 in January from -0.07 in December (-0.15 initially). It was the first positive level since February 2023 and the highest since October 2022. A reading of zero indicates that all of the indicators are growing at their long-term average. The January reading was up from -0.16 in January 2024 and a low of -0.34 in October 2023; however, having remained below its recent high of +0.27 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.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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