Breaking Down the Components of the Chicago Fed National Activity Index

In the Chicago Fed update, we learned that the CFNAI rose to +0.07 in April from -0.37 in March. Two of the four categories made negative contributions in April (personal consumption and sales). All four categories improved from March.

A chart overlay of the complete multi-decade span of all four categories, even if we use the three-month moving averages, is quite challenging for visual clarity:

Here is a close-up view since 2000:

Component Breakdown

The next set of charts show each of the four components since 1967 with callouts for the last year. Because of the highly volatile nature of the data, the charts are based on three-month moving averages, a smoothing strategy favored by the Chicago Fed economists. The values for the months that the NBER subsequently identified as recession starts are also indicated.

Last month, production made the largest improvement of the four categories from -0.17 to +0.15. The 3-month moving average dropped from 0.02 to -0.03. The average of the 3-month moving averages for the eight recessions starts is -0.05 with a range from -0.29 to 0.26. The current level is above the "recession average" and is higher than six of the eight recessions shown above.

Last month, employment improved from -0.03 to +0.01. The 3-month moving average dropped from -0.02 to -0.04. The average of the 3-month moving averages for the eight recession starts is -0.04 with a range from -0.14 to 0.18. The current level is equal to the "recession average" and is higher than four of the eight recessions shown above.

Last month, personal consumption improved from -0.06 to -0.04. The 3-month moving average dropped from 0.00 to -0.06. The average of the 3-month moving averages for the eight recession starts is -0.01 with a range from -0.07 to 0.07. The current level is below the "recession average" and is higher than only two of the eight recessions shown above.

Last month, sales improved from -0.10 to -0.04. The 3-month moving average rose from -0.12 to -0.09. The average of the 3-month moving averages for the eight recession starts is -0.02 with a range from -0.18 to 0.34. The current level is below the "recession average" and is higher than only two of the eight recessions shown above.

To close this dissection of the CFNAI components, let's reassemble them for a closer look at their collective three-month moving averages since 2007.

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