The Chicago Fed National Activity Index (CFNAI) improved month over month.
However, the index still remains negative. More importantly, my real time recession
indicator, which utilizes the CFNAI data, remains negative.
The real time recession indicator is constructed from the Economic
Cycle Research Institute's Leading Economic Indicator and the CFNAI data.
Looking at figure 1, the red labeled price bars correlate to those times
that the indicator predicts that the US economy is in a recession. The green
analogue line in the lower panel corresponds to the actual recession calls
made by the National Bureau of Economic Research.
While not perfect (but what is), there is a high degree of correlation between
the two.
Figure 1. Real Time Recession Indicator/ weekly
Figure 2. Real Time Recession Indicator/ weekly
The CFNAI indicator is constructed from 85 different variables of national
economic activity, and it is designed to gauge overall economic activity and
related inflationary pressure. You read about the index by clicking here: Chicago
Federal Reserve.
Disclaimer: Guy M. Lerner is the editor and founder
of The Technical Take blog. His commentary on the financial markets
is based upon information thought to be reliable and is not meant as investment
advice. Under no circumstances does the information in his columns represent
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