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Exploring Economic Trends: A Comparison of U.S. Diffusion Index and CFNAIDIFF
This analysis compares a self-constructed U.S. economic diffusion index—based on employment, industrial production, and consumer sentiment—with the Chicago Fed National Activity Diffusion Index (CFNAIDIFF). Using a 7-month rolling average, the diffusion index reveals economic expansion and contraction trends, while CFNAIDIFF offers a national perspective.
Key insights include:
Diffusion Index: Highlights significant fluctuations and recent economic weakening due to declines in key variables.
CFNAIDIFF: Displays steadier trends, reflecting broader national stability.
Correlation: Weak (0.157), indicating the diffusion index's sensitivity to localized shifts compared to CFNAIDIFF's national scope.