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What is Chicago Fed National Activity Index (or CFNAI)?
The Chicago Fed’s National Activity Index (or CFNAI) for March will be released on Monday, April 21, 2014. It’s a national monthly index which estimates overall economic activity and related inflation. Since economic activity tends toward long-term average growth rate over time, a positive index reading implies the economy is growing above the historical trend rate of growth, while a negative index reading corresponds to below-average rate of growth. A reading of zero indicates the economy is growing at a historical growth trend rate.
The CFNAI is a weighted average of 85 existing monthly indicators of national economic activity. The 85 economic indicators that are included in the CFNAI are drawn from four broad categories of data: production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories. Each of these data series measures some aspect of overall macroeconomic activity. The derived index provides a single summary measure of a factor common to these national economic data.
Highlights of February’s release
What investors can expect in the March release
In the next two sections we will look at manufacturing activity indices issued by Federal Reserve Banks of Richmond and Kansas City, which will also release this week. These are regional and cover activity in their respective districts. We will also look at the impact of these releases on companies in the S&P 500 Index (IVV) like Union Pacific Corporation (UNP) and FedEx (FDX). Both Union Pacific (UNP) and FedEx (FDX) are part of the iShares Transportation Average ETF (IYT), which tracks the Dow Jones Transportation Average Index. We will also consider the impact of the manufacturing indices on fixed income ETFs like iShares Floating Rate Bond (FLOT).
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