November 2018 Chicago Fed National Activity Index

Economic growth continued in November 2018 according to the Chicago Fed National Activity Index (CFNAI).  This comprehensive look at the economy considers 85 individual components in an attempt to quantify the direction of the economy.  In total, the index moved up +0.22 after no gain in October. However, the three-month moving average decelerated to +0.12 from +0.23 a month earlier; while this drop does suggest deceleration, it is apparent from this indicator that the trajectory of economic output is still up. 

Three of the four major categories showed promise in the period.  Employment-related components led the indicator higher, but it decelerated to +0.1 from +0.15 a month earlier.  Production output contributed +0.08 as industrial production rose +0.6 percent after declining in the prior month.  The sales, orders, and inventories category moved up 0.09, more than recovering all of a marginal retreat in October.  Only the contribution from personal consumption and housing category was lower, weakening further to minus 0.05 from minus 0.04.

Individual components were mixed.  Forty-eight of the 85 indicators made positive contributions to the index, while 37 were negative.  Forty-five improved versus a month earlier, 37 deteriorated, and three were unchanged.  Of the improving indicators, 11 contributed negatively. 

Deceleration was evident in this iteration of the CFNAI.  The three-month moving average was nearly cut in half during the period and declined for a third consecutive month.  Once again, the economy appears to be slowing.  While this does not portend a recession, it certainly suggests the probability of one is rising.