December 2017 Chicago Fed National Activity Index
Submitted by Atlas Indicators Investment Advisors on January 24th, 2018Output accelerated during December 2017 according to data from the Chicago Federal Reserve National Activity Index (CFNAI). This comprehensive indicator rose to +0.27 from the downwardly revised count of +0.11 (originally +0.15). Additionally, the three-month moving average held relatively steady at +0.42 versus +0.43 in November, suggesting the economic expansion is not overheated.
Internals were mixed in the period. Production-related components performed best to end the year, rising to +0.25 after being negative a month earlier. The sales, orders, and inventories category made a contribution of +0.08, rising slightly from +0.04 a month earlier. Employment-related figures weakened to +0.01 from +0.12, partially reflecting a slowdown in hiring. Finally, the personal consumption and housing category dropped to -0.07 from an already weak tally of -0.03 in November.
Slightly more than half of the components made positive contributions. Forty-three of the 85 indicators added to the CFNAI’s total. The other 42 subtracted from the tally. Thirty-seven improved from November to December, while 47 deteriorated and one remained unchanged. Of those improving, nine still made negative contributions.
December’s report suggests the economy remains in a bit of a sweet spot. The three-month moving average is comfortably above zero, a level which would indicate things are only moving in line with the trend, but it also remains well below the mark of +0.7 which tends to foreshadow accelerating inflation. Atlas looks forward to the next iteration of CFNAI because the three-month moving average will no longer include October’s figures which were boosted by hurricane recovery efforts. January’s tally should provide a more accurate perspective on the state of America’s economy. Stay tuned