Chicago FED National Activity Completes the V-Shape Recovery in May

Chicago FED has increased above pre-covid levels, but another stimulus is needed for the US economy

The recovery is complete here

The economic activity fell to the slowest pace ever during March-April in US and most of the globe, as the lock-down from coronavirus halted everything. As a result, all economic indicators dived lower, with the Chicago FED  falling to -16.74 points, which was revised later to -17.89 points. But, today’s report showed a jump to 2.61 points, which completes the v-shape recovery, bringing it above the pre-covid levels.

The National Metric from the Chicago FED

“Led by improvements in production- and employment-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +2.61 in May from -17.89 in April. All four broad categories of indicators used to construct the index made positive contributions in May, and all four categories increased from April. The index’s three-month moving average, CFNAI-MA3, moved up to -6.65 in May from -7.50 in April.”
Meanwhile, the $600 weekly US unemployment bonus money runs out at the end of July so that’s somewhat of a hard deadline for another aid bill. Talk has ranged from less than $1 trillion (McConnell) to more than $2 trillion (Navarro). The House has already passed a $3 trillion bill. The size and composition of the bill will go a long way towards sustaining or breaking the level of risk appetite in the market. Kudlow also said a while ago that the stimulus deal is ‘highly likely’ this summer but the size is undetermined. hey will have no choice but to introduce another bill, starting in August.
ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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