The Chicago Fed National Activity Index: May 2011

Today’s release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated that national economic remained weak in May with the index falling into contraction territory of -0.37 while the three month moving declined to -0.19.

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.

It’s important to note that at -0.19, the current three month average index value is indicating that contraction may be in the offing.

New Home Sales: May 2011

Today, the U.S. Census Department released its monthly New Residential Home Sales Report for May showing a monthly decline with sales falling 2.15% since April but increasing 13.52% above the level seen a year earlier to a historically low 319K SAAR units.

These results, continue to indicate that the nation's housing markets are firmly entrenched in a double-dip and come fully in-line with the other pitiful housing data-points I have outlined in past months.

It's important to recognize that the inventory of new homes has now fallen to a new series low at 166K units, lowest level seen in in at least 47 years while the median number of months for sale increased to 9.2.

The monthly supply declined to 6.2 months while the median selling price declined 3.43% and the average selling price declined a notable 5.23% from the year ago level.

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

Extended Unemployment: Initial, Continued and Extended Unemployment Claims June 23 2011

Today’s jobless claims report showed a notable increase to initial unemployment claims and a slight decline to continued claims as a rising trend continued to materialize for initial claims.

Seasonally adjusted “initial” unemployment increased by 9,000 to 429,000 claims from last week’s revised 420,000 claims while seasonally adjusted “continued” claims declined by 1,000 resulting in an “insured” unemployment rate of 2.9%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 3.95 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.48 million people that are currently counted as receiving traditional continued unemployment benefits, there are 7.44 million people on state and federal unemployment rolls.