Chicago Fed National Activity Index

As talk of a possible recession gains traction, more people are looking for any evidence that supports their views.  Yesterday's release of the Fed's National Activity Index provides an example.  The release showed that the economy went from above average growth in July to below average growth in August.  To some, this data-point showed that the economy is clearly on the decline.  However, putting the number into perspective, we found that the index has seen two lower readings in the last year (November '06 and January '07).  Additionally, readings below zero are not uncommon.  Since 1967, 44% of all monthly readings in the index were negative.  Over the same period, the economy has been in a recession only 13% of the time.