US economic activity continued to decelerate in March, according to this morning’s update of the Chicago Fed National Activity Index (CFNAI)—a multi-factor benchmark that tracks dozens of indicators. The index’s three-month average (CFNAI-MA3) eased to -0.18, a three-month low. That’s still well above the tipping point (-0.70) that marks the start of new recessions. Yet today’s update reaffirms the view that US growth slowed in the first quarter—a slowdown that’s expected to deliver a disappointing Q1 GDP report when the Bureau of Economic Analysis publishes its “advance” report next week.
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The US stock market may be on the verge of decisively throwing off its bear-market shackles and making fools of analysts (including yours truly) who’ve been issuing cautious commentary in recent months. It’s also been clear for more than a month that a previously issued markets-based warning on US business-cycle risk has been wrong, at least so far. As yesterday’s broad-minded review of economic indicators relates, the US economy wasn’t in recession in March, based on data published to date. In the wake of the equity market’s rally in recent weeks, the call that stocks were at risk of a bear market may be about to fade too.
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