The Chicago Federal Reserve’s National Activity Index (CFNAI) is a key indicator of economic activity and inflationary pressure, based on 85 monthly indicators. In June, the CFNAI fell to +0.05 from +0.23 in May, indicating a decline in economic growth. Three categories made negative contributions to the index, leading to a decrease in the overall trend since November 2022.
The CFNAI-MA3, a three-month moving average, rose to -0.01 in June, showing a consistent decline in economic activity. This trend has been observed since November 2022, despite the U.S. economy expanding during the same period. The index is constructed to show above-average growth with positive values, below-average growth with negative values, and average growth with a zero value.
Looking at the historical data dating back to March 1967, the CFNAI has shown volatility over the years, with fluctuations in economic activity. The index is based on four broad categories of indicators: production and income, employment, personal consumption, and sales. In June, three of these categories saw decreases, contributing to the overall decline in the index.
The CFNAI is considered a forward-looking indicator, providing insights into the future state of the economy. Despite the recent decrease in economic growth, it is essential to monitor the index’s trends to understand the overall economic landscape. By analyzing the components of the index and their historical trends, policymakers and economists can gain valuable insights into the state of the economy.
Overall, the Chicago Fed’s National Activity Index serves as a critical tool for assessing economic activity and inflationary pressure. As we navigate through changes in the economy, monitoring the CFNAI and its components can provide valuable information for decision-making and strategic planning.