The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to post a slight rise in the November update that’s scheduled for Monday (Dec. 21), based on The Capital Spectator’s average point forecast for several econometric estimates. The projection for -0.14 reflects a modest improvement over the previous month, which indicated US economic activity that’s moderately below the historical trend rate of growth. Only negative values below -0.70 signal an “increasing likelihood” that a recession has started, according to guidelines from the Chicago Fed. Using today’s average estimate for November as a guide, CFNAI’s three-month average is expected to reflect an expansion that’s moderately below the historical trend but still above the tipping point that marks the start of a new US recession.
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The manufacturing sector may be in recession, but the labor market still looks resilient. That’s the key message in recent economic updates. It’s anyone’s guess if this skewed relationship will endure, but for the moment it’s enough to keep the threat of recession in the category of a low-probability event, based on numbers published to date. With so much riding on payrolls these days, a stumble in job growth right about now would be a problem. But that’s not a real and present danger, according to yesterday’s weekly update on new filings for unemployment benefits.
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