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Blog
What Can Revisions to the NFCI Tell Us About Stock Market Volatility?
In this blog post, we document that recent revisions to the Chicago Fed’s National Financial Conditions Index (NFCI) have been large and clustered in time—a pattern not seen since the 2007–09 global financial crisis. As financial conditions tightened early on during the Covid-19 outbreak here in the U.S., there were large positive revisions to the NFCI through much of March. We show that revisions of this magnitude and in this direction have often preceded substantial increases in stock market volatility. More recently, in late March and April, the large negative revisions to the NFCI ...
Blog
Measuring the Decline in Economic Activity During the Covid-19 Pandemic
On June 8, 2020, the National Bureau of Economic Research (NBER) issued a statement announcing that its Business Cycle Dating Committee determined U.S. economic activity had reached a cyclical peak in February 2020. Beginning in March 2020, a multitude of economic indicators declined sharply as public health orders that required nonessential businesses to close were implemented during the early stages of the Covid-19 pandemic here in the U.S. The declines then accelerated in April as these orders were expanded to cover nearly the entire country. However, the data for May released so far seem ...
Newsletter
Measuring Detroit’s Economic Progress with the DEAI
This article explains what the Detroit Economic Activity Index (DEAI) tells us about Detroit’s economic progress as of late 2019. Although the rate of progress had slowed some since 2016, the city continued to make headway last year in its recovery from bankruptcy.In a previous Chicago Fed Letter,1 we introduced the DEAI to show that Detroit was doing better in late 2016 than in late 2014, when it exited bankruptcy. According to the DEAI, there were signs of increasing private investment, higher employment, lower unemployment, rising incomes, and improving real estate values in December ...
Newsletter
A “Big Data” View of the U.S. Economy: Introducing the Brave-Butters-Kelley Indexes
We describe a new set of indexes?the Brave-Butters-Kelley Indexes (BBKI)?constructed from a large panel of monthly macroeconomic time series and quarterly real gross domestic product (GDP) growth. Through August, these indexes suggest that real GDP growth was somewhat below its long-run trend to start the third quarter and that its business cycle component had declined noticeably in recent months despite some indications of improvement in its leading indicators.
Newsletter
When It Comes to Wage Growth, the Measure Matters
Average wages are a closely watched economic indicator. The growth rate of average wages can help tell us, for example, how workers? living standards are changing, whether employers face rising costs that they might pass through to consumer price inflation, and whether the labor market is tight or has room to improve further. In the realm of monetary policy, the last two applications are particularly important because they can help people assess the outlook for the Federal Reserve?s ?dual mandate? of price stability and maximum employment.