The Chicago Federal Reserve's national activity index fell to its lowest level since January just five months after recording its best score since the end of the recession.
The index dropped to -0.53 in April from -0.23 in March and is below the three month moving average of -0.04 and approaching the -0.7 level which often presages recessions.
The index is composed of 85 different economic indicators and is constructed so that a zero reading means the economy’s is growing at its long term trend. Since the beginning of 2010 the index has averaged -0.06 per month. Sharp bursts of growth above trend have uniformly been followed by equally sharp dips below.
In the 46 months since the end of the recession in the second quarter (June) of 2009 there have been 14 months of above trend economic growth and 32 months where the economy performed below its historical average.
The economy has average 2.06% annualized growth measured on the quarter since the beginning of of 2010. That is below both the average of the past ten years and the average of the past generation.
For the decade from January 1998 to December 2007 the US economy averaged a quarterly annualized growth rate of 2.9%. For the 30 years beginning in 1978 the quarterly rate was 3.1%.
Chief Market Strategist