Chicago Fed: Economic Growth Slowed In May

Consider: the index has ranged from a high 2.68 to a low of -5.01 with an average monthly change of 0.62. That’s 8% of the entire index range! The latest reading is a month-over-month change of -0.56.

CFNAI Volatility

Further underscoring the volatility is the roller-coaster list of CFNAI monthly headlines from 2014 forward.

As the monthly chart depicts and the headline verbs reinforce, it’s unwise to read very much into the data for any specific month. Also data revisions frequently make the real-time headline subsequently inaccurate. The 3-month moving average is a better number to watch.

The Long-Term Economic Trend

In the final chart we’ve let Excel draw a linear regression through the CFNAI data series. The slope confirms the casual impression of the previous charts that National Activity, as a function of the 85 indicators in the index, has been declining since its inception in the late 1960s, a trend that roughly coincides with the transition from a good-producing to a post-industrial service economy in the information age.

CFNAI Trend

For a more detailed perspective on long-term economic trends, see our latest Understanding the CFNAI Components, which we update a few hours after the CFNAI is released.

This article is brought to you courtesy of Doug Short from Advisor Perspectives.

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