Chicago Fed Shows Cooling National Economy in May

While this is a slight improvement, it is still in negative territory. Also, the prior report went from -0.15 to -0.19 and the skews the so-called improvement.

Another issue to consider is that the 85 indicators come from four broad economic categories. Two of those four broad categories increased from April. Still, only the employment, unemployment, and hours category made a positive contribution to the index in May.

When you look closer at the data, that so-called growth looks less optimistic. Some thirty-five of the eighty-five individual indicators made positive contributions to the CFNAI in May — and the left fifty of the eighty-five indicators having made negative contributions.

Forty-three indicators improved from April to May, while 41 indicators deteriorated and one was unchanged. Of the indicators that improved, 21 made negative contributions. The Chicago Fed showed the following data:

The index’s three-month moving average, CFNAI-MA3, increased slightly to –0.16 in May from –0.20 in April. May’s CFNAI-MA3 suggests that growth in national economic activity was somewhat below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.The CFNAI Diffusion Index, which is also a three-month moving average, was unchanged at –0.13 in May.

The markets are trading around Greek hopes so far on Monday. The Chicago Fed data is often looked at as a precursor for other reports, but it is not generally considered a major market-moving report.