The Chicago Fed National Activity Index (CFNAI) is a monthly index designed to gauge overall economic activity and related inflationary pressure.
Index Suggests Economic Growth Increased in May
The Chicago Fed National Activity Index (CFNAI) increased to +0.18 in May from –0.26 in April. Three of the four broad categories of indicators used to construct the index increased from April, and two categories made positive contributions in May. The index’s three-month moving average, CFNAI-MA3, decreased to –0.09 in May from –0.05 in April.
The CFNAI Diffusion Index, which is also a three-month moving average, decreased to –0.16 in May from –0.13 in April. Forty-eight of the 85 individual indicators made positive contributions to the CFNAI in May, while 37 made negative contributions. Fifty-four indicators improved from April to May, while 29 indicators deteriorated and two were unchanged. Of the indicators that improved, 14 made negative contributions.
- Production-related indicators contributed +0.23 to the CFNAI in May, up from –0.15 in April.
- The sales, orders, and inventories category’s contribution to the CFNAI was –0.02 in May, down from –0.01 in April.
- Employment-related indicators made a neutral contribution to the CFNAI in May, up from –0.05 in April.
- The personal consumption and housing category’s contribution to the CFNAI was –0.03 in May, up from –0.06 in April.
Commentary
There’s a lot of noise in the economic data and the CFNAI, by aggregating numerous individual indicators, gives you a simple view of the current economic situation. The month to month changes can be somewhat volatile so long term investors should focus on the 3 month average.
The current reading of -0.09 indicates that the economy is growing just slightly below trend. What is trend?
Average YOY Change in Real GDP5 Years 2.2
10 Years 2.4
15 Years 2.0
20 Years 2.1
