Chicago Fed: Why We Are Still in Recession

碧海潮生

Chicago Fed: Why We Are Still in Recession 7 comments
by: Wildebeest December 28, 2009

This Chicago Fed National Activity Index was released last week. A description of the index and its 85 indicators is available here. The Chicago Fed split the 85 indicators into four categories: Production & Income, Employment, Unemployment, & Hours, Personal Consumption & Housing, and Sales, Orders, & Inventories.

A three month moving average is their preferred way of viewing the data:



We see there has been a sharp recovery in the index since the crash, the three month moving average, the CFNAI-MA3, increased now to –0.77, which optimists, market pumpers, and the media tend to view as confirmation we have pulled out of recession.

However to interpret the data we should surely follow the criteria set by the Chicago Fed itself, after all it is their index, they know how to interpret it. To interpret the data in the context of the business cycle, the Chicago Fed says:

A CFNAI-MA3 value above +0.20 following a period of economic contraction indicates a significant likelihood that a recession has ended.

So we have a way to go before this index indicates a likelihood that we are out of recession.

The reason we are not coming out of recession, using the Chicago Fed criteria, is that personal consumption and housing is dragging on the economy.

Here is a chart of the three month moving average of that category:



Whoooah. It is heading back down.

Disclosure: no positions

SpringMountain

ranchgirl

Everyday, we have so many conflict views to confuse us.

New York Fed thinks we have zero chance of double dip recession.
Chicago Fed thinks we are still in recession, far-far away out of there.

How about big ben?

CoolMax

Everyday, we have so many conflict views to confuse us.

New York Fed thinks we have zero chance of double dip recession.
Chicago Fed thinks we are still in recession, far-far away out of there.

...
ranchgirl 发表于 2009-12-29 02:04 AM

Only one could be right, so the answer is to use your own judgement.

ranchgirl

Only one could be right, so the answer is to use your own judgement.
CoolMax 发表于 2009-12-29 02:41

I know you are always correct, almost, right?