Economic Activity Slows Down in January; Gas Prices Rise Suddenly
- Feb 25, 2014
The Chicago Fed reported on Monday that its National Activity Index (CFNAI) decreased to –0.39 in January from –0.03 in December. Declines in production-related indicators were the main cause for the drop, which could be a reflection of the weather, which is being widely blamed for temporarily slowdowns in various sectors of the economy.
The index’s three-month moving average, which is known as the CFNAI-MA3, dropped to +0.10 in January from +0.26 in December, marking its fifth consecutive reading above zero. January’s CFNAI-MA3 suggests that growth in national economic activity is still above historical trends, and supports the contention that January was a weather-related aberration. According to the Chicago Fed, the economic growth reflected by the CFNAI-MA3 also suggests limited inflationary pressure over the coming year (which is in line with recent PPI and CPI readings).
The index is a weighted average of 85 indicators of national economic activity drawn from four broad categories: production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories. A zero value indicates that the national economy is expanding at its historical trend rate of growth. Negative values indicate below-average growth, and positive values indicate put growth above average.
Gas Prices Rise Suddenly
The average U.S. price for regular gasoline has seen an upward climb for more than two weeks now, rising about 15 cents a gallon during that period, according to AAA. That’s the largest price increase since last summer. As of Monday, the average for a gallon of regular was almost $3.42 a gallon, compared with nearly $3.29 a month ago.
Still, compared with a year ago, the price is still lower; in late February 2013, a gallon averaged over $3.77, notes AAA. The price of gas may continue its upward trajectory for now, since refinery maintenance season is about to begin – which reduces retail gas supplies — and some oil-producing places, notably Venezuela and South Sudan, and still embroiled in political uncertainty, which adds uncertainty to worldwide oil supplies.
Even so, the Energy Information Agency is still predicting lower retail gas prices on average in 2014 and ’15, at least compared with last year: $3.51 in 2013, $3.44 this year, and $3.37 next year. The downward movement will occur as the average price of oil on world markets drops, predicts the EIA.
Wall Street had a positive day on Monday, with the Dow Jones Industrial Average gaining 103.84 points, or 0.64 percent. The S&P 500 advanced 0.62 percent and the Nasdaq was up 0.69 percent.