Chicago Fed CFNAI Update

The Chicago Fed’s National Activity Index (CFNAI) — the best economic indicator you’ve never heard of — printed this morning.

The folks at the Chicago Fed say:

Month-to-month movements can be volatile, so the index’s three-month moving average,the CFNAI-MA3, provides a more consistent picture of national economic growth.

A CFNAI-MA3 value above –0.70 following a period of economic contraction indicates an increasing likelihood that a recession has ended. A CFNAI-MA3 value above +0.20 following a period of economic contraction indicates a significant likelihood that a recession has ended.

The 3MA moved above -0.70 in September of last year, then moved back below momentarily, and has been above since November. A print at or above +0.20 still seems a bit distant.

Here’s the CFNAI-MA3 (which printed at -0.18, up ever so slightly from last month’s -0.31):

From the release:

Led by improvements in production- and employment-related indicators, the Chicago Fed National Activity Index increased to –0.07 in March, up from –0.44 in February. Three of the four broad categories of indicators that make up the index made positive contributions in March, while the consumption and housing category made the lone negative contribution.

The index’s three-month moving average, CFNAI-MA3, increased to –0.18 in March from –0.31 in February. March’s CFNAI-MA3 suggests that growth in national economic activity, while still below average, continues to improve. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 indicates subdued inflationary pressure from economic activity over the coming year.

While the improvement is certainly welcome, I would caution that the Consumption and Housing sub-component remains mired in negative territory:

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