Chicago Fed National Activity Index Returns to Negative Territory in August
by:Tom Moeller
|in:Economy in Brief
Summary
- Each of the four components is negative.
- Production & personal spending losses follow positive readings.
- Three-month average of total remains below zero.
The Federal Reserve Bank of Chicago reported that its National Activity Index (CFNAI) declined to -0.16 from 0.07 in July, revised from 0.12. The index was negative in all but one month from February to June. The August CFNAI was constructed using data available as of September 21, 2023. At that time, August data for 51 of the 85 indicators were available. For all missing data, estimates were used in constructing the index.
Smoothing out month-to-month volatility, the index's three-month moving average of -0.14 last month compared to -0.15 in both of the prior two months. It was at a low of -0.39 in December. This index is expressed in standard deviation units from zero (with a value of zero defined as trend real GDP growth). Research at the FRB Chicago indicates that average readings of -0.70 or below are consistent with the economy being in a recession.
The monthly figures in August reflected a decline in the personal consumption & housing reading to -0.08 from +0.03 in July. The employment, unemployment & hours reading of -0.04 was the same as in July. The sales, orders & inventory component of -0.03 compared to -0.04 in July and -0.03 in June. The production & income indicator contributed -0.02 to the CFNAI after adding 0.12 in July. It had been as low as -0.70 in December.
The CFNAI Diffusion Index, which measures the breadth of movement in the component series and is also a three-month moving average, fell to -0.04 in August from –0.01 in July. Thirty-five of the 85 individual indicators made positive contributions to the CFNAI in August, while 50 made negative contributions. Thirty-three of the indicators improved in August, while 49 indicators deteriorated and three were unchanged. Of the indicators that improved, 16 made negative contributions.
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.
More Economy in Brief
Asia