The Chicago Fed’s National Activity Index (CFNAI) printed yesterday, and the 3-month moving average – which is what the folks in Chicago tell us to look at – declined for the first time in 2009 (click through for larger image):
Though not necessarily cause for concern, the decline is certainly worth keeping an eye on. As one data point does not a trend make, I'll simply suggest this could be a yellow flag.
Below I have charted the 3-month moving average of CFNAI for the four recessions in which it breached –2.00 (in other words, nasty recessions).
The circular markers represent the points at which the NBER determined the recessions ended. The diamond marker is where the ‘79 - ‘80 recession bleeds into the ‘81 recession (the purple line from the point of that diamond coincides exactly with the light blue line at month one. Got it?).
Given the fact that some NBER metrics are still in decline (employment, real income), and that another (real retail sales) is arguably flat-lining, I’m not sure we’ll be seeing an end-of-recession call any time soon, and today’s downturn in the 3-month MA of CFNAI bears close watching in the months ahead.
