US economic activity in August increased at a pace that’s fractionally above the historical trend, according to this morning’s update of the Chicago Fed National Activity Index’s three-month average (CFNAI-MA3). Last month’s reading of +0.01 ticked down from July’s revised +0.02 level, but both numbers reflect an upbeat macro trend.

Meanwhile, the sharp decline in the monthly data for this benchmark may be a warning sign for the months ahead. The drop to -0.41 marks the lowest reading in six months.

The monthly figures are noisy, which is why the Chicago Fed recommends focusing on the three-month average for monitoring the business cycle. By that standard, the economic trend still looks encouraging. CFNAI-MA3’s current +0.01 level is well above the -0.70 mark that signals the start new recessions, according to Chicago Fed guidelines.


Analyzing the updated CFNAI-MA3 data with a probit model also shows that the probability is low (below 4%) that a recession started in August. The current risk estimate in the chart below is based on a probit regression that reviews the historical record of NBER’s business cycle dates in context with CFNAI-MA3. The low risk estimate aligns with last week’s update of business-cycle risk via The Capital Spectator’s proprietary indexes.