US economic output accelerated in July, returning to its historical trend rate, according to this morning’s update of the Chicago Fed National Activity Index’s three-month average (CFNAI-MA3). The benchmark’s rise to 0.0 marks the strongest pace of growth in six months, based on CFNAI-MA3.
Today’s numbers offer additional evidence that the US economy has strengthened recently. Accordingly, recession risk is low via data through last month. The current CFNAI-MA3 reading of 0.0 for July is well above the -0.70 mark that signals the start of new recessions, according to Chicago Fed guidelines.
Analyzing the updated CFNAI-MA3 data with a probit model continues to show that the probability is low (below 4%) that a recession started in July. The current risk estimate in the chart below is based on a probit regression that reviews the historical record of NBER’s business cycle dates in context with CFNAI-MA3. The low risk estimate is in line with last week’s update on business cycle risk via The Capital Spectator’s proprietary indexes.