The Chicago Fed National Activity Index: November 2016

The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated that national economic activity worsened in November with the index falling to a contraction level of -0.27 from a weak level of -0.05 a month earlier while the three month moving average rose to a level of -0.14.

The CFNAI is a weighted average of 85 indicators of national economic activity collected into four overall categories of “production and income”, “employment, unemployment and income”, “personal consumption and housing” and “sales, orders and inventories”.

The Chicago Fed regards a value of zero for the total index as indicating that the national economy is expanding at its historical trend rate while a negative value indicates below average growth.

A value at or below -0.70 for the three month moving average of the national activity index (CFNAI-MA3) indicates that the national economy has either just entered or continues in recession.

New Home Sales: November 2016

Today, the U.S. Census Department released its monthly New Residential Home Sales Report for November showing an increase with sales rising 5.2% from October climbing 16.5% above the level seen in November 2015 but still remaining near an historically low level with 592K SAAR units.

The monthly supply declined to 5.1 months while the median selling price declined 3.66% and the average selling price declined 4.49% from the year ago level.

The following chart show the extent of sales decline to date (click for full-larger version).

Employment Situation: Nonfarm Payrolls and Civilian Unemployment November 2016

The latest Employment Situation Report indicated that in November, net non-farm payrolls increased by 178,000 jobs overall with the private non-farm payrolls sub-component adding 156,000 jobs while the civilian unemployment decreased to 4.6% over the same period.

Net private sector jobs increased 0.13% since last month climbing 1.68% above the level seen a year ago and climbing 5.96% above the peak level of employment seen in December 2007 prior to the Great Recession.

Employment Situation: Unemployment Duration November 2016

The latest employment situation report showed that conditions for the long term unemployed improved in November.

Workers unemployed 27 weeks or more declined to 1.856 million or 24.8% of all unemployed workers while the median term of unemployment declined to 10.1 weeks and the average stay on unemployment declined to 26.3 weeks.

Employment Situation: Total Unemployment November 2016

The latest Employment Situation report showed that in November “total unemployment” including all marginally attached workers decreased to 9.3% while the traditionally reported unemployment rate declined to 4.6%.

The traditional unemployment rate is calculated from the monthly household survey results using a fairly explicit definition of “unemployed” (essentially unemployed and currently looking for full time employment) leaving many workers to be considered effectively “on the margin” either employed in part time work when full time is preferred or simply unemployed and no longer looking for work.

The Bureau of Labor Statistics considers “marginally attached” workers (including discouraged workers) and persons who have settled for part time employment to be “underutilized” labor.

The broadest view of unemployment would include both traditionally unemployed workers and all other underutilized workers.

To calculate the “total” rate of unemployment we would simply use this larger group rather than the smaller and more restrictive “unemployed” group used in the traditional unemployment rate calculation.