The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to tick higher in the September update that’s scheduled for tomorrow (Oct. 22), based on The Capital Spectator’s average point forecast for several econometric estimates. The projection for +0.05 is slightly above August’s +0.01 reading, which reflects US economic activity that’s close to the historical trend rate of growth. 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 September as a guide, CFNAI’s three-month average is expected to reflect an expansion that’s slightly above the historical trend and therefore well above the tipping point that marks the start of a new US recession.
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Deutsche Bank’s chief international economist advises that the US isn’t tipping into a recession. “There is a big disconnect between the current narrative in both equity and rates markets and the actual economic data,” he says via Bloomberg. “This economy is stronger than its reputation and for some reason many investors want to hold onto the 2009 story of ‘the economy is not good’ “.
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