(The Center Square) – The Federal Reserve Bank of Chicago’s Survey of Economic Conditions Activity Index suggests more stability and less uncertainty across five Midwestern states.
Thom Walstrum, Principal Business Economist for the Federal Reserve Bank of Chicago, said the index increased to +1 in August from –22 in July.
“The survey reading for August was surprisingly strong, given what other similar indicators are saying, but there’s also a fair amount of noise in this indicator. It tends to be jagged, move up one month after moving down the next,” Walstrum said.
The Fed’s Seventh District survey includes Illinois, Indiana, Iowa, Michigan and Wisconsin.
Walstrum said the report’s three-month averages are more in line with other indicators.
“Sales growth continues to be positive but a little bit below average. I would say the same with hiring, according to our contacts, is positive, growing, but below average as well,” Walstrum said.
Many Illinois politicians have suggested that federal policy measures from the Trump administration have caused economic uncertainty.
Walstrum said data reflected an increase in uncertainty related to federal policy earlier this year, but there appears to be less uncertainty than there was three-to-six months ago.
It’s good news that the latest survey shows stable growth, Walstrum said.
“It went pretty negative in the spring, and it’s been rising ever since. I think the stability after there was a lot of uncertainty to start the year, things have kind of stabilized in a sense and outlooks have been improving,” Walstrum said.
Walstrum said the survey is a short-run indicator. To the extent that any type of government policy might play a role in the data, Walstrum said it would almost always be federal policy and not state or local policy.
Input cost growth has been going up and price growth has been growing, which is in line with the inflation data, Walstrum said.
The Chicago Fed’s National Financial Conditions Index was unchanged at -0.56 in the week ending Aug. 22, suggesting steady financial conditions.
