Mar 23, 2021 - Economy & Business

Chicago Fed's activity index shows U.S. economy in decline

Data:; Chart: Axios Visuals
Data:; Chart: Axios Visuals

The Chicago Fed's national activity index showed the U.S. economy at below-trend growth for the first time since April last month, and in fact, is suggesting a decline.

Why it matters: In the midst of all the bullishness from economists, CEOs and money managers about 2021's expected breakout growth, the first quarter has been awfully bad based on hard data.

What it means: The Chicago Fed's index seeks to answer the question, "Is the economy growing at a rate faster than its potential or slower than its potential?" using a weighted average of 85 existing monthly indicators of U.S. economic activity.

  • The index is composed of four broad categories of data: production and income; employment, unemployment and hours; personal consumption and housing; and sales, orders and inventories.
  • It is constructed to have an average value of zero and a standard deviation of one.

Why you'll hear about this again: February's decline wasn't an aberration. The index saw negative readings for production as well as personal consumption and housing, and all four categories decreased from January.

  • The index’s three-month moving average also turned negative last month.
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