Chart: The economy is officially doing better than we thought

Here's another indication of just how much better-than-expected the economic news has been lately: The Citi Economic Surprise Index — a widely followed indicator that provides a quick-and-dirty snapshot of how the economy is faring against expectations — just hit its highest level in the last two years.

How it works: Citi surprise indexes show how economic data compares with consensus analyst expectations.

• Higher numbers mean data has been better than expected; lower numbers, worse.

Why it matters: Last week's great reports on weakening U.S. consumer inflation, slowing wholesale price increases, falling import prices and lower-than-expected claims for jobless benefits helped send the surprise index to the highest level in two years.

Flashback: It was almost exactly a year ago that the index was blaring alarms that a sharp slowdown was in the works, as the Fed sharply raised rates while inflation stayed stubbornly high.

• At that time, economists began to ratchet up their predictions that a recession was likely to hit.

Yes, but: Now economists are backing off those calls, in the face of economic data that's been far perkier than conventional wisdom called for.

What's next: The preliminary Markit purchasing managers index report for July, a closely watched survey gauging conditions as seen by inventory managers at manufacturers and service firms, will be released Monday — offering the first read on whether the economy's solid run continued into this month.