March CFNAI Components: Employment, Production, Consumption, Sales

The Chicago Fed's National Activity Index, which we reported on, is based on 85 economic indicators drawn from four broad categories of data:

• Production and Income
• Employment, Unemployment, and Hours
• Personal Consumption and Housing
• Sales, Orders, and Inventories

The complete list is available here in PDF format.

In yesterday morning's Chicago Fed update, we learned that "Led by declines in production- and employment-related indicators, the Chicago Fed National Activity Index (CFNAI) fell to –4.19 in March from +0.06 in February. All four broad categories of indicators used to construct the index made negative contributions in March, and three of the four categories decreased from February. The index’s three-month moving average, CFNAI-MA3, decreased to –1.47 in March from –0.20 in February. Following a period of economic expansion, an increasing likelihood of a recession has historically been associated with a CFNAI-MA3 value below –0.70."

A chart overlay of the complete multi-decade span of all four categories, even if we use the three-month moving averages, is quite challenging for visual clarity:

So here is a close-up view since 2000:

Here is a set of charts showing each of the four components since 1967. Because of the highly volatile nature of the data, the charts are based on three-month moving averages, a smoothing strategy favored by the Chicago Fed economists. The values for the months that the NBER subsequently identified as recession starts are also indicated.

To close this dissection of the CFNAI components, let's reassemble them for a closer look at their collective 3-month moving averages since 2007.