Chicago Fed Index Increase Suggests the Recession Is Over

CHICAGO FED -- At –0.63 in September (up from –0.96 in the previous month), the index’s three-month moving average, CFNAI-MA3, suggests that growth in national economic activity was below its historical trend. However, the CFNAI-MA3 in September improved to a level greater than –0.70 for the first time since the early months of this recession. For the four previous recessions, the first month when the CFNAI-MA3 was above –0.70 coincided closely with the end of each recession as eventually determined by the National Bureau of Economic Research (see top chart above showing the last three recessions).

The bottom chart above shows the monthly change in the CFNAI-MA3, which has been positive for the last eight months (February through September), the first time since 1975 of 8 consecutive monthly increases, and similar to the 7 consecutive monthly increase from December 2001 to June 2002 that marked the end of the 2001 recession (see shaded areas).

Comments

[Gedankonomist:]

Question: How is the "National activity index" defined? In these days where the federal government considers hamburger flipping "manufacturing," I'm a bit skeptical. What sort of "activities" are being considered? Standing in the unemployment line? Illegal immigrants running for the border? The FED ratcheting up the printing presses?

Oct 27 09:38 AM

[flow5:]

No straight line! It's curving down now. We're still -.5 trillion real-gdp below 2qtr 2008.

Oct 27 10:49 AM

[flow5:]

Monetary flows (MVt), the proxy for real-growth bottoms in Nov. 2009. However monetary flows (the proxy for inflation) continues to be relentless, e.g., housing, gasoline, groceries, going up, while unemployment is also going up. I.e., this is stagflation, get used to it. Regardless. Buy & hold for the next 2 years.

Oct 27 09:56 PM