Economic Growth Slows in the US
The Chicago Fed National Activity Index dropped to -0.16, indicating a slower rate of economic activity. Production, personal consumption, and housing indicators contributed to the decline.
Data from the Federal Reserve Bank of Chicago reveals that economic growth in the United States slowed in August. The Chicago Fed National Activity Index (CFNAI) dropped to -0.16, indicating that economic activity is expanding at a slower rate compared to its average historical trend.
The CFNAI index evaluates overall economic activity and inflationary pressures, using 85 economic indicators from four categories of data: production and income, employment, unemployment and hours, personal consumption and housing, and sales, orders, and inventories.
All four categories contributed to the decline in the index in August, although to varying degrees. Production-related indicators experienced the most significant contraction, declining from a positive 0.12 in July to -0.02 in August. This decline was influenced by a slowdown in industrial production growth, which increased by 0.4% in August compared to 0.7% in July.
Additionally, the contribution of personal consumption and housing indicators also decreased, dropping to -0.08 from 0.03 in July. Meanwhile, employment-related indicators remained unchanged in their contribution to the headline index, and sales showed some improvement, although they still remained in negative territory.
The CFNAI diffusion index, which measures how the change in the monthly index is spread across the 85 indicators over three months, weakened slightly to -0.04 in August. However, the index's headline three-month moving average saw a slight increase to -0.14 from -0.15.
Both indicators suggest that the US economy expanded in August, as they are above the respective values of -0.35 and -0.70 that are historically associated with economic growth.