Many market participants continue to disagree over the implications of the decision by Janet Yellen and the Federal Reserve to not raise interest rates. While 24/7 Wall St. would have liked to see a vote of confidence around the globe, the first thing that came to mind was that most Federal Reserve regional economic reports would show either very low and spotty growth readings or worse. Now we have yet another Federal Reserve report showing that growth was poor or negative.

The Chicago Fed National Activity Index (CFNAI) is a national reading, and it has a one-month look back. Its reading in August fell to -0.41 from +0.51 in July. The CFNAI said that the drop was led by declines in production-related indicators, but of concern here is that all four broad categories of indicators managed to show decreases from the prior report in July.

The index’s three-month moving average fell to +0.01 in August from +0.02 in July, suggesting that growth in national economic activity was very close to its historical trend. The economic growth also continues to suggest limited inflationary pressure over the coming year. The Diffusion Index, also a three-month moving average, fell to -0.09 in August from a gain of +0.05 in July.

It turns out that only 25 of the 85 individual indicators made positive contributions to the CFNAI in August. Some 60 of the 85 indicators made negative contributions.

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A review of the Chicago Federal Reserve Bank’s website shows that the four broad categories are as follows:

• Production and income
• Employment, unemployment and hours
• Personal consumption and housing
• Sales, orders and inventories

Investors and economic watchers can always use a reminder of how such economic reports are evaluated and what each reading really means. The CFNAI reading was represented as follows:

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.

This is one of those readings that has a backward looking view, versus some of the more fresh Federal Reserve regional reports. August was also the month in which the news out of China and the selling panic hit the stock market.

Thursday’s report rarely, if ever creates a big boost or a big drop in the financial markets. It is still just one more negative or cautious reading in the broader scheme of things. This is unlikely to heavily influence GDP expectations for the third quarter, but it is also unlikely to boost any serious hopes of growth picking up.

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