Economic activity in March slumped to the softest pace in 31 months, according to this morning’s update of the Chicago Fed National Activity Index. The three-month moving average of this business cycle benchmark (CFNAI-MA3) decreased to -0.27 last month from February’s -0.12 reading. Last month’s estimate is the lowest since Aug. 2012 for the CFNAI-MA3 data and another sign that the macro trend for the US has suffered in this year’s first quarter. Using this index as a guide, economic activity is well below the historical trend (i.e., below zero).

Today’s update marks the fourth consecutive month of deceleration for CFNAI-MA3 after reaching +0.45 last Nov., a four-year high. The big-picture trend has clearly taken a hit so far this year. Keep in mind, however, that only negative values below -0.70 for CFNAI-MA3 indicate that a new recession has started, according to guidelines published by the Chicago Fed. By that standard, the US isn’t in recession. There’s still a moderate gap between the current reading and the tipping point, although the divide between the latest three-month reading and the red line of -0.70 has narrowed to the thinnest degree in several years.

The key question now: How will the April economic profile compare? Another month of disappointing numbers would send a dark signal at this stage. But the current month’s macro updates have yet to be published. Suffice to say, the incoming data in the weeks ahead will be critical.

Despite last month’s weakness, March wasn’t the start of a new recession, as the current CFNAI-MA3 data show. A similar message was issued in last week’s update of my econometric review of the US macro trend and the Conference Board’s March release of its Leading Economic Index for the US.

Overall, it’s obvious that economic risk is elevated a bit these days but still well short of the danger zone. The case for expecting modest growth is still a reasonable if slightly battered view at the moment… until or if the April numbers tell us otherwise. Stay tuned….