What is Chicago Fed National Activity Index(CFNAI)
What is it?
- The Chicago Fed National Activity Index (CFNAI) is a monthly index that measures economic activity in the United States.
- The CFNAI is a composite index that is constructed from 85 different economic indicators, including employment, industrial production, housing starts, and personal income.
- These indicators are weighted and combined to create a single index value, which ranges from -1.00 to +1.00.
- A value above zero indicates that economic activity is above trend, while a value below zero indicates that economic activity is below trend.
Who Reports It?
It is produced by the Federal Reserve Bank of Chicago and is designed to provide a broad overview of the economic conditions in the country.
How it is Generated?
- The Chicago Fed National Activity Index (CFNAI) is calculated by combining 85 different economic indicators into a single index value.
- The indicators used in the CFNAI include measures of employment, production, income, sales, and orders, as well as other data on housing, personal consumption, and business activity.
- To calculate the CFNAI, the economic indicators are first divided into four broad categories:
- First Category is production and income. Under this category Industrial production, real personal income, real manufacturing, and trade sales are included
- The second category is Employment, unemployment, and hours Under this category the following items are included. Nonfarm payroll employment, unemployment rate, average weekly hours employment, unemployment
- The 3rd category is Personal consumption and housing. They included real personal consumption expenditures and new and existing home sales.
- The final category is Sales, orders, and inventories. It includes new orders for manufactured goods, factory orders for nondefense capital goods, inventories of raw materials
- Each of these categories is assigned a weight based on its importance in the overall economy.
- Next, the indicators within each category are…