Chicago Fed National Index: "On The Edge" in [Market-Ticker]

Posted 2012-11-26 09:01
by Karl Denninger
in Macro Factors

Chicago Fed National Index: "On The Edge"

The index’s three-month moving average, CFNAI-MA3, decreased from –0.36 in September to –0.56 in October — its eighth consecutive reading below zero. October’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend.

Now here's the sidebar....

When the CFNAI-MA3 value moves below –0.70 following a period of economic expansion, there is an increasing likelihood that a recession has begun.

Begun.

Not "will begin", has begun.

The problem with this indicator is that it has less predictive value than you'd like; it is more of a coincident indicator than anything else. On the other hand, the Fed Indices I use, when they show a three-month or longer trend of negative prints, tend to indicate recession is inbound.

Take the two together and you've got trouble -- and in that regard, we're right on the edge. The trend is not only down it looks a lot like the 2001 and 2008 time frames, as we were heading lower and about to "formally recognize" economic trouble.

We'll get more data this week, but this is not a positive print at all.

Discussion below (registration required to post)

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User Info	Chicago Fed National Index: "On The Edge" in forum [Market-Ticker]
Wearedoomed Posts: 3584 Incept: 2009-01-14 slightly red state	It's all Shrub's fault!!!!!111eleventy ---------- And you, my father, there on the sad height, Curse, bless me now with your fierce tears, I pray. Do not go gentle into that good night. Rage, rage against the dying of the light. 2012-11-26 09:03:33 Permalink
Vitchilo Posts: 4568 Incept: 2011-04-27	I think it's Sandy's fault! Or those obstructionists republicans not wanting to pass a new stimulus bill! Yeah that must be it! ---------- "Every normal man must be tempted at times to spit upon his hands, hoist the black flag, and begin slitting throats." -- H.L. Mencken Last modified: 2012-11-26 09:08:34 by vitchilo 2012-11-26 09:08:13 Permalink
Agau Posts: 4914 Incept: 2010-06-04	Using gold dollars, we have been in a depression since 2009 or so. 2012-11-26 09:57:56 Permalink
Digitlman Posts: 328 Incept: 2011-03-04	US Dallas Fed Manufacturing Activity (Nov) M/M -2.8 vs. Exp. 2.5 (Prev. 1.8) Other reports seem to agree - look out below! 2012-11-26 11:48:57 Permalink