Economy Watch: Economic Growth Improved in October, Says Chicago Fed

The Chicago Fed reported on Monday that its National Activity Index increased to –0.08 in October from –0.23 in September.

chicago fedThe Chicago Fed reported on Monday that its National Activity Index increased to –0.08 in October from –0.23 in September. That’s an improvement, and in line with other data about the strength of the economy, but still a little below historic growth trends. All four broad categories of indicators that make up the index increased from September, but then again all four categories again made negative contributions to the index in October.

The index’s three-month moving average, the ponderously named CFNAI-MA3, edged down to –0.27 in October from –0.20 in September. October’s CFNAI-MA3, which removes some of the noise that comes with the monthly numbers, also suggests that growth in national economic activity was somewhat below its historical trend.

The Chicago Fed’s index is a weighted average of 85 indicators of national economic activity in four broad categories of data, namely 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 means below-average growth; and positive values point to above-average growth.

So is the economy not actually growing quite as fast as other recent reports have suggested? Possibly, though the positive prediction regarding economic growth keep on coming. Last week, Atlanta Fed said its GDPNow model forecast for real U.S. GDP growth in the fourth quarter of 2016 was an annualized 3.6 percent, up from 3.3 percent because of strong residential construction in October.