The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to decelerate to a +0.23 reading in the December update that’s scheduled for release tomorrow (Jan. 23), based on The Capital Spectator’s median point forecast for several econometric estimates. The projection is moderately below the +0.48 reading for November, which reflected a strong above-average pace of economic growth for the US relative to the historical trend. Only negative values below -0.70 indicate an “increasing likelihood” that a recession has started, according to guidelines from the Chicago Fed. Using today’s estimate for December as a guide, CFNAI’s three-month average is expected to remain at a level that’s historically associated with growth at an above-trend pace.
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Global economic growth continued to decelerate through December, according to business survey data, but there are few signs at the moment that the offshore slowdown is threatening the US macro trend. A diversified set of indicators shows that macro momentum remained solidly positive through the end of 2014. It’s naïve to think that the US can remain insulated from foreign turbulence if conditions deteriorate further in Europe and elsewhere. But analyzing the latest figures suggests that the potential for trouble in the US is minimal for the immediate future thanks to an acceleration in the pace of the expansion in recent months.
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