Do you feel your economy will get lucky? … Well do you, punk!?
I for one believe that the path of least resistance is down at this point and to that end I offer the following data-point coming from today’s release of the Chicago National Activity Index (CFNAI).
The following chart shows the very sensitive diffusion index that the Chicago Fed distills from the other CFNAI measures.
Notice that while this measure improved slightly from last month, its current level of -0.12 is notably weak as well comes just two months after the October level of -0.23, the lowest level seen during our latest economic expansion and caps an entire year of values that appear to be generally trending down.
The Chicago Fed considers the crossing of -0.35 of this measure as a “[signal] of the increased likelihood of the beginning (from above) and the end of a recession (from below)”, so while we are not yet at that threshold, given the current trends (recessionary manufacturing sector, mounting inventories, deflating commodities, falling stocks and wealth effect, etc.) you’ve got to ask yourself one question… will the economy get lucky?
