From today’s Chicago Fed report:
“Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to –0.15 in June from –0.48 in May. Two of the four broad categories of indicators that make up the index improved from May, but only the production and income category made a positive contribution in June.
The index’s three-month moving average, CFNAI-MA3, increased from –0.38 in May to –0.20 in June—its fourth consecutive reading below zero (see chart above). June’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.”
MP: The June gains in the CFNAI (based on 85 individual economic variables) were led by production-related variables including industrial production and manufacturing, indicating that the expansion in America’s industrial sector continues to remain one of the brightest spots in the U.S. economy. Further, the Chicago Fed’s research shows that it typically takes a CFNAI-MA3 reading below –0.70 before it’s likely that a recession has begun (see red line in chart). The improvement in the June CFNAI-MA3 to -0.20 in June from -0.38 in May provides additional evidence that the U.S. economy, despite below-average growth, has not yet come close to entering another recession.
Sure. Things are actually booming. It’s just that 250,000,000 or so of all Americans are too stupid to see what’s going on.
Prof. Perry, it is nice to see that someone is reporting on some of the more favorable indicators that the economy is not as terrible as the crepe-hangers might have us believe. But your recent posts have a Pollyanna-ish quality which belies too much of what most of us can see all around us. For example, it is nice to know that some food prices are down from their peaks. But those peaks were set at very high levels last year, and they are likely to be exceeded later this year if drought conditions continue. Similarly, some measures of industrial production may be up, but given where we have been, the fact that we may not actually be entering yet another downturn, but are merely lingering in the doldrums, is not exactly good news.