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.