What is it about?
Building on the tradition of the Chicago Fed National Activity Index, we construct a new index of economic activity for the U.S. using the universe of monthly data on real economic growth and GDP.
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Why is it important?
Our new index (published under the title Brave-Butters-Kelley Indexes by the Chicago Fed) is shown to align with historical U.S. recessions and expansions with 99% accuracy, besting other well-known business cycle measures. In addition, we show how a subcomponent of the index acts as a leading indicator of both the business cycle and inflation from 6-12 months ahead.
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This page is a summary of: A new “big data” index of U.S. economic activity, Economic Perspectives, January 2019, Federal Reserve Bank of Chicago,
DOI: 10.21033/ep-2019-1.
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