CHICAGO (2/25/14)--Economic activity slowed for the second straight month in January, likely dragged down by the severe winter weather, according to numbers released Monday by the Chicago Federal Reserve.
The Chicago Fed National Activity Index (FNAI) decreased to -0.39 in January from -0.03 in December. It looks at 85 economic indicators such as production, jobs, housing, consumer spending and inventories. Negative values signal a below-average rate of economic growth.
The labor market improved slightly after December came in slow. The 113,000 tick upwards in payrolls leaves concerns about job market strength, according to Moody's analysts (Economy.com Feb. 24). Weakness in jobs, housing and industrial production could be ascribed to disruptive winter storms. Pent-up demand likely will boost numbers when the weather improves (MarketWatch Feb. 24).
The CFNAI's three-month moving average, a better indicator of economic trends, dipped to 0.1 from 0.26. That is slightly above neutral and suggests the economy is on pace with historical trends, Moody's said. A zero reading means that the economy is growing at its historical trend, while positive values signal above-average growth.
The prospects for 2014 remain upbeat, however, with last year's threats losing their strength, analysts said. The federal budget and debt-ceiling issues put fiscal uncertainty off the table until 2015, and Federal Reserve policy also appear to be stable.