September 2017 Chicago Fed National Activity Index

Economic output improved in September according to the Chicago Fed National Activity Index.  Results from this comprehensive study of the economy jumped to 0.17 from the downwardly revised count of minus 0.37 (originally minus 0.31) in August.  Despite the monthly turnaround, the three-month moving average stayed below zero and matched the prior period’s revised tally of minus 0.16 (originally minus 0.04), suggesting America’s output is growing beneath its recent trend.

All four major categories improved, even if a few remained negative.  Production-related indicators increased to 0.10 in September from minus 0.33 a month earlier.  Sales, orders, and inventories also made a positive contribution, edging up to 0.07 from 0.06 in August.  Despite weak payroll figures from the Bureau of Labor Statistics in September, employment-related indicators moved up to 0.05 from 0.01.  The contribution of the personal consumption and housing segment of the economy increased despite remaining negative, rising to minus 0.07 from minus 0.11 in the prior period.

This measure of the economy has 85 components, and the results are always mixed.  This time, 46 of the 85 individual indicators made positive contributions, while 39 were negative.  Fifty-four indicators improved in September, and 30 deteriorated.  Of the improving indicators, 17 still made negative contributions.

Data contained in the CFNAI report suggest our economy continues along its shallow trajectory.  While the economy is not showing signs of recession, it is far from white-hot as well.  America’s muddle-along circumstances, the hallmark of the current economic expansion, remain the most likely outcome for the next several months and quarters ahead.