Economy
August 23, 2016
CFNAI Offers Reassurance for Economic Growth
Written by Sandy Williams
Economic growth increased for a second consecutive month in July according to the Chicago Fed National Activity Index (CFNAI). The index is a gauge of economic activity and inflation and is expressed by three separate index values: the CFNAI and two 3-month moving average indexes, the CFNAI-MA3 and CFNAI Diffusion Index. The 3-month averages help to smooth out volatility and give a clearer picture of economic growth. The headline CFNAI rose to +0.27 in July from +0.05 in June.
The three month moving average for the CFNAI-MA3 increased to -0.10 from -0.19, the highest level since February but slightly below its historical trend. The result from this index suggests that inflationary pressure will be subdued in the coming year.
