Chicago Fed Index Still Signals Subpar Economy
Wall Street Journal
The Federal Reserve Bank of Chicago’s National Activity Index worsened in August, but its three-month moving average rose above its level from a year earlier, in August 2008 just before the financial crisis deepened.
The three-month average stood at -1.09 in August, below the recessionary threshold of -0.7. An index reading of zero signals a trend rate of growth (usually defined as around 3%).
The index tracks national economic activity through monthly 85 data series. In a new Chicago Fed Letter released this morning, Fed economist Scott Brave explains that the index’s three-month average (as of August) indicates that economic activity is now finally above the trough of the 2001 and 1990-91 recessions.
“It appears likely that recovery from the current recession had not yet reached full swing as of August 2009, but early signs of recovery are apparent,” he says.
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