The plot thickens for deciphering the next move for the business cycle… or does it? The Chicago Fed National Activity Index (CFNAI)—a broad measure of the U.S. economy—slipped last month. “Two of the four broad categories of indicators that make up the index deteriorated from January, but of these two, only the production and income category made a negative contribution to the index in February,” the Chicago Fed reports. On the other hand, monthly numbers are noisy, which is why we’re told to pay closer attention to CFNAI’s three-month moving average, which “suggests that growth in national economic activity was above its historical trend.”

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Mild Winter Weather and Payroll Employment
Macroadvisers | Mar 22
To summarize, we estimate that unseasonably mild weather this winter has had a measurable effect on employment, with the level of employment in February 72 thousand above the level consistent with no deviation in weather from seasonal norms. Our model suggests that in the event weather in March returns to seasonal norms, the change in payroll employment will be reduced by 58 thousand. Furthermore, a continuation of seasonally normal weather into April would result in a further drag on the change in employment then of about 14 thousand. The result for March provides an estimate of the significant adjustment one should make to the headline employment number in March to more accurately judge the underlying strength of employment.

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