by Calculated Risk on 12/21/2009 08:31:00 AM

From the Chicago Fed: Index shows economic activity improved in November

Led by improvements in production-related and employment-related indicators, the Chicago Fed National Activity Index increased to –0.32 in November, up sharply from –1.02 in October.
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The index’s three-month moving average, CFNAI-MA3, increased to –0.77 in November from –0.87 in October. November’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. The level of activity, however, remained in a range that has historically been consistent with the early stages of a recovery following a recession.

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This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967. According to the Chicago Fed:

"When the economy is coming out of a recession, the CFNAI-MA3 moves significantly into positive territory a few months after the official NBER date of the trough. Specifically, after the onset of a recession, when the index first crosses +0.20, the recession has ended according to the NBER business cycle measures. ... The critical question is: how early does the CFNAI-MA3 reveal this turning point? For four of the last five recessions, this happened within five months of the business cycle trough."

Although improved in November, the Chicago Fed National Activity Index is still negative. According to Chicago Fed, it is still early to call the official recession over.