Housing and Economic Activity: National Update
On Monday, the Federal Reserve Bank of Chicago released its monthly index for October 2017—the Chicago Fed National Activity Index (CFNAI)— reporting the overall economic activity across the U.S.
The index, which was constructed using data available as of October 19, 2017, analyzes economic activity based on summarizing variation in 85 data series classified into four main categories.
So how does the Chicago Fed organize this data? The CFNAI is designed so that periods of economic expansion have values of above negative 0.70. Meanwhile, periods of economic contraction have values below negative 0.70.
According to the index, the overall economic activity reported an increase in growth with a positive 0.17 in September, compared to a negative 0.37 in August.
However, despite this slight increase in September, the index reports that month-to-month movements are volatile. Therefore, the index also evaluates a three-month moving average to provide a more consistent picture of national economic growth—the most recent three-month moving average was unchanged at negative 0.16 in September.
The contribution of the housing category to the CFNAI is combined with personal consumption—representing an increase to negative 0.07 in September from negative 0.11 in August.
However, housing starts decreased to about 1.13 million annualized units in September from about 1.2 million in August. In addition, the index notes that housing permits decreased to about 1.23 million in annualized units in September, which is a decrease from 1.27 million in the previous month. Conversely, consumption indicators improved, which increased the category’s overall contribution to the economy.
In addition, the report’s job-market gauge was a positive contributor to the economy, increasing to positive 0.06 from positive 0.01 in the previous month.
To view the full report and other indicators impacting the U.S. economy, click here.