The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to decline slightly +0.09 in Monday’s update for July, according to The Capital Spectator’s median econometric forecast. The projection is marginally below the previously released +0.13 reading for June, which reflected above-average economic growth relative to the historical trend. Only values below -0.70 indicate an “increasing likelihood” that a recession has started, according to guidelines from the Chicago Fed. Based on today’s estimate for July, CFNAI’s three-month average is expected to remain at a level that’s historically associated with growth at a moderately above-trend pace.
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This week’s upbeat data on housing has inspired a new round of charges that the Federal Reserve “is clearly behind the curve.” Economist Scott Grannis proclaims: “Great news: the Fed is likely to raise rates sooner rather than later.” He explains that “nominal GDP has been growing at about a 4% pace for most of the past four years, yet the Fed has kept short-term rates extremely low. This is unsustainable.”
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