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Economy

Economic Data (USA)

Monday, June 22, 2020

Chicago Fed National Activity Index (CFNAI) for May 2020

The Federal Reserve Bank of Chicago released its National Activity Index (CFNAI) for May 2020:

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Predicted: -5.00
  • Actual (CFNAI): +2.61

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  • Previous Month (revised): -17.89
  • 3-Month Moving Average (CFNAI-MA3): -6.65
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The CFNAI is a weighted average of 85 indicators of growth in national economic activity drawn from four broad categories of data:

  • Production and income;
  • Employment, unemployment, and hours;
  • Personal consumption and housing; and
  • Sales, orders, and inventories.

The "predicted" figure is what economists were expecting, while the yellow-highlighted figure is what was reported.

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Chart: Chicago Fed National Activity Monthly Index - May 2020 Update
Chart: Chicago Fed National Activity Monthly Index
May 2020 Update

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From Today's Report

"...Index Suggests Economic Growth Increased Substantially In May

Led by improvements in production- and employment-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +2.61 in May from –17.89 in April. All four broad categories of indicators used to construct the index made positive contributions in May, and all four categories increased from April. The index’s three-month moving average, CFNAI-MA3, moved up to –6.65 in May from –7.50 in April..
."

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Understanding The CFNAI:

A zero value for the monthly index has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth.

Periods of economic expansion have historically been associated with values of the CFNAI-MA3 above -0.70 and the CFNAI Diffusion Index above -0.35. Conversely, periods of economic contraction have historically been associated with values of the CFNAI-MA3 below -0.70 and the CFNAI Diffusion Index below -0.35.

An increasing likelihood of a period of sustained increasing inflation has historically been associated with values of the CFNAI-MA3 above +0.70 more than two years into an economic expansion. Similarly, a substantial likelihood of a period of sustained increasing inflation has historically been associated with values of the CFNAI-MA3 above +1.00 more than two years into an economic expansion.

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