The Chicago Fed’s National Activity Index — one of my favorite measures — printed this morning. The monthly number edged down slightly, and the 3-month moving average, which the folks in Chicago tell us to focus on, rose somewhat.
Here, however, is the money shot from the release (my bold):
May’s CFNAI-MA3 suggests that growth in national economic activity was above its historical trend. Moving above +0.20, the index’s three-month moving average in May also reached a level historically associated with a mature economic recovery following a recession. With regard to inflation, the CFNAI-MA3 in May indicates limited inflationary pressure from economic activity over the coming year.
So here’s the Chicago Fed letting us know that we may well have seen the best of what this “recovery” had to offer. I would note that the Personal Consumption and Housing sub-component of the index continued to be mired in negative territory, subtracting 0.42 from the overall print. Now, this is not to imply that a double dip is a foregone conclusion, though that is certainly one outcome. At the very least, it argues for a very slow growth scenario.>
Chicago Fed National Activity Index
click for larger charts
Having composed this post, I decided to reach out to my contact at the Chicago Fed to inquire specifically about their use of the word “mature.” He told me that I should read it as if it were “ongoing,” and pointed me to the headline of their piece — Index Shows Economic Activity Continued to Expand in May. I suppose that whether they should have substituted the word “ongoing” for the word “mature” may be a matter for linguists (cunning and otherwise). This may be hair-splitting and nit-picking, but I personally infer a meaning from the word “mature” that it appears the Chi Fed may not have meant to convey. What say you linguists — what does “mature” imply to you?
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