According to the latest monthly report released by the Federal Reserve Bank of Chicago, the pace of growth in the overall U.S. economy decelerated in April.
The Chicago Fed National Activity Index (CFNAI) for April dropped to -0.45 from a reading of 0.05 in March. The three-month moving average for the index slipped from -0.24 in March to -0.32 in April.
CFNAI is a timely and reliable indicator, but it does not receive much coverage in the national press. I suspect the reason is that it appears a bit too confusing for most reporters. And as anybody in the plastics industry can attest, the mainstream press is not always good with coverage of complicated issues.
So before I dive deeper into the details from last month's report, I should first offer a brief explanation about CFNAI and what it measures.
Each month, economists at the Chicago Fed compile the vast array of U.S. economic data series. They assign each series an appropriate weight and then combine them all to calculate a single index that is intended to indicate the change in the overall economic activity level that month.
Simply put, these Chicago economists take all the data reported by all the U.S. government agencies each month — such as jobs, housing starts, durable goods orders, etc. — and they distill it down into one number. You can think of it as akin to the GDP number, only it is calculated and reported monthly instead of quarterly and it is reported as an index rather than in total dollars.
Sounds simple, right? And this should be something that noneconomics professionals would embrace. I am often asked by plastics industry professionals to dispense with all the statistics and jargon and risk analysis mumbo-jumbo and to render it all down into a version that is understandable, timely and precise. Something like "thumbs-up or thumbs-down."