Chicago Fed Nat'l. Activity Index Says Recession

MoneyNews
Tuesday, March 25, 2008
CHICAGO -- An index of U.S. economic activity fell in February to its weakest since April 2003, a report from the Federal Reserve Bank of Chicago showed on Monday.

A less-volatile three-month moving average of economic indicators also fell sharply, and revisions to previous data suggest a recession may have begun as early as December.

The Chicago Fed said its National Activity Index was -1.04 in February versus a downwardly revised -0.68 in January, first reported at -0.58. The index has been negative, indicating below-trend growth, since August 2007.

The index's three-month moving average dropped to -0.87 from -0.73 in January, originally reported at -0.60. Revisions also pushed the December average below -0.70.

When the three-month value drops below -0.70 following a period of economic expansion, "there is an increasing likelihood that a recession has begun," the Chicago Fed said.

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"Thus, February marked the third consecutive month the three-month moving average remained below this threshold," the Chicago Fed said.

February's reading matched the April 2003 level, hit just after the start of the U.S. war in Iraq.

Overall, just 20 of the index's 85 individual indicators made positive contributions in February and 65 made negative contributions, the Chicago Fed said.

All four broad categories of indicators made negative contributions to the index in February.

Production-related indicators turned more negative in February, as did employment indicators.

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