Chicago Fed: Slightly Stronger Economic Growth In September

The US economy grew a bit faster in September, according to today’s delayed update of The Chicago Fed National Activity Index, a macro benchmark based on 85 indicators. “The index’s three-month moving average, CFNAI-MA3, increased to –0.03 in September from –0.15 in August, marking its seventh consecutive reading below zero,” the Chicago Fed reports. Although the expansion remains a touch “below trend,” as indicated by CFNAI-MA3’s marginally negative value, the current -0.03 level is the highest since February. That’s a sign that economic growth, while still moderate, shows no imminent signs of deterioration, or so the September numbers suggest.

CFNAI-MA3’s rise to -0.03 for September is a modestly stronger improvement than expected, based on The Capital Spectator’s average econometric forecast. Meanwhile, three of the four main categories of indicators that comprise the Chicago Fed National Activity Index delivered positive contributions in September.

Based on the guidelines published for this index, today’s update shows that recession risk was low in September. The current -0.03 level of CFNAI-MA3 value is well above the critical -0.70 mark. Only when CFNAI-MA3 falls below -0.70, after a period of economic expansion, would a decline reflect “an increasing likelihood that a recession has begun,” according to the Chicago Fed. Today’s relatively upbeat report is in line with the Oct. 21 update of The Capital Spectator’s Economic Trend & Momentum indices, which also advise that business cycle risk remains low.