The US economy posted another month of growth in August but at a pace that’s “below its historical trend,” according to today’s update of The Chicago Fed National Activity Index. “The index’s three-month moving average, CFNAI-MA3, increased to –0.18 in August from –0.24 in July, marking its sixth consecutive reading below zero,” a press release issued by the bank advised. The marginal improvement was slightly below expectations, based on last week's release of The Capital Spectator’s average forecast.
Using CFNAI-MA3 as a benchmark of the US economic trend, the expansion rolls on, but at a relatively sluggish pace. Nonetheless, the -0.18 reading for last month is the highest since April and so it’s fair to say that the trend isn’t deteriorating. (A zero reading for CFNAI-MA3 equates with economic conditions that match the historical trend.)
Based on the guidelines published for this index, today’s update also shows that recession risk was low in August. A CFNAI-MA3 value below -0.70 after a period of economic expansion "indicates an increasing likelihood that a recession has begun," according to the Chicago Fed. In sum, last month's macro profile remained convincingly in the growth camp. That’s in line with last week’s update of The Capital Spectator's Economic Trend & Momentum indices for August: both benchmarks suggest that business cycle risk remains low, according to the latest economic and financial indicators.