Chicago Fed National Activity Index – November 2008
The Chicago Fed National Activity Index (CFNAI) declined to -2.47 in November from a revised -1.27 reading in October. The data used to compute this index have been published earlier. In November, all four major categories of the index -- employment, production, income, consumer spending and housing -- posted declines. The intensity of weakness in economic conditions suggested by the November reading is consistent with other economic reports which have indicated that the current recession matches the situation seen in the 1980 and 1981-82 recessions.
According to the Chicago Fed, "when the 3-month moving average of the CFNAI moves below -0.70 following a period of economic expansion, there is an increasing likelihood a recession has begun." The history of the CFNAI goes back to May 1967. Based on this criterion, the CFNAI has identified the onset of the last three recessions. The CFNAI was negative prior to the 1969, 1980 and 1981 recessions but it was not sufficiently negative and it gave a delayed signal in 1973 (see table 1). This index compliments the Conference Board’s Index of Leading Indicators to the extent that it confirms the message, but the CFNAI is not a leading index.
