logo
  Join        Login             Stock Quote

Chicago Fed Nat'l Activity Index: Slower Slow Growth In January

 February 25, 2013 10:20 AM


The Chicago Fed National Activity Index (CFNAI) dropped in January to -0.32 from +0.25 in December, the Chicago Fed reports, although the three-month average (CFNAI-3MO) reading rose to +0.30 from an upwardly revised +0.23 in December. Recession risk, in other words, was minimal last month. Although economic growth slowed in the start of the year, the three-month average of this index in January was well above the -0.70 level. That's considered to be the tipping point for the onset of recessions. (CFNAI, a weighted average of 85 indicators, is designed as a benchmark of US economic activity broadly defined.)

It's notable that December's three-month average was revised higher by a substantial amount: +0.23 vs. the initial estimate of -0.11. The revised figure is based on additional data that's been published in recent weeks. The December revision suggests that the disappointing initial estimate of fourth-quarter GDP will also be revised to a higher level in this Thursday's release of the second update of national economic activity. In fact, the consensus forecast currently sees a 0.5% growth rate for GDP in last year's fourth quarter, up from the initial estimate of -0.1%, according to Briefing.com.

[Related -3 US Updates Show Ongoing Growth]

[Related -Moving Averages Don't Move Stocks]

The relatively upbeat report for CFNAI-3MO was hardly a surprise. As I discussed last week, the available data for January looked encouraging in the February 18 update of The Capital Spectator Economic Trend & Momentum indices. A few days later, I noted that three additional releases for the January profile were clearly biased toward growth too. No wonder that Friday's preview of CFNAI-3MO looked encouraging.

The outlook for February and beyond, however, looks a bit more shaky. That's only a hunch, of course, in part because of worries over the uncertainty via the automatic budget cuts that are set to begin in March. Some analysts warn that the economy could be thrown into a recession if Congress doesn't intervene to soften the blow. But no one's really sure how the cuts will impact the business cycle until we see the numbers.

Meantime, the first clue of what to expect for the still-mysterious February economic profile will hit the streets on Friday, March 1, with the release of the ISM Manufacturing Index. The consensus forecast sees a slight downward moderation in growth, according to Econoday.com. Actually, a competing index from Markit Economics already told us as much last week, with the initial estimate of this month's PMI manufacturing index slipping a bit to 55.2 from 56.1 in January. Nonetheless, Markit's first look at February manufacturing data "signalled further expansion," according to the press release (pdf).

Bottom line: a broad set of January data tells us that this year arrived in a recession-free state. Deciding what comes next, of course, is a work in progress.
iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article image3 US Updates Show Ongoing Growth

Three economic updates today provide more evidence that moderate growth endures for the US. The numbers du read on...

article imageBuy These Solar Stocks Before They Snapback

Sometimes the market hands you a gift. And it would be foolish not to take it. Thanks to general market read on...

article imageInvestors Are Even More Euphoric And Confident.

As noted on the blog last Thursday, even though the market had been down for three straight weeks, last read on...

article imageThe Butterfly Machine

There’s a phenomenon called the Butterfly Effect. One common quotation is “It has been said that something read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.