One way to gauge economic activity in the United States is via the Chicago Fed National Activity Index (CFNAI). “The CFNAI is a weighted average of 85 existing monthly indicators of economic activity… A positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.”
Due to the volatility found in using monthly data, a three month moving average provides a more consistent measure of health of the economy.
The most recent three month moving average reading was 0.09. This was the fourth consecutive positive month. Since the end of the recession in the middle of 2009 the CFNAI has had sustained periods of both above and below trend growth.
There are four major subsets to the CFNAI; Personal Consumption and Housing, Production and Income, Sales, Orders and Inventories and Employment, Unemployment and Hours.
Currently the only component that is detracting on a three month moving average basis is Personal Consumption and Housing. This has been the case since September 2007. More recently the detraction from the total index level has been less than it had been.
After negatively contributing to economic activity last fall, the three month moving average for Production and Income has been contributing positively ever since.
The three month moving average for Sales, Orders and Inventories has not had a sustained large impact on the CFNAI level since the economic recovery had been sustained in 2010. It has, however, consistently fluctuated between being a minor positive and negative contributor for the last few years.
The Employment, Unemployment and Hours component has been a positive contributor to national economic growth since early 2010.
Data Source: Federal Reserve Bank of Chicago