The Chicago Federal Reserve's National Activity Index (CFNAI) came in to -0.07, up from a revised February, of -0.44. The CFNAI-MA3 means the 3 month moving average of the CFNAI. This index is volatile, so the three month moving average is typically the more important metric.

The index’s three-month moving average, CFNAI-MA3, increased to –0.18 in March from –0.31 in February. March’s CFNAI-MA3 suggests that growth in national economic activity, while still below average, continues to improve. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 indicates subdued inflationary pressure from economic activity over the coming year.

Production-related indicators made a contribution of +0.18 to the index in March, compared with +0.04 in February. Manufacturing industrial production increased 0.9 percent in March after increasing 0.2 percent in February, and manufacturing capacity utilization rose to 70.0 percent in March from 69.4 percent in the previous month. The manufacturing capacity utilization rate in March reached its highest level since November 2008.

Zero is the neutral point of this index. Negative implies contraction. Following a period of growth, a CFNAI value of below -0.70 indicates a recession start. A value of +0.20 after a recession indicates you're really pulling out of one. This index is used to predict business cycles.

This index uses 83 indicators and of these, housing, not unemployment was the drag on the indicator. You say "no way", well, me too. Not with an official unemployment rate still of 9.7%.

Employment-related indicators made a contribution of +0.12 to the index in March, up from –0.13 in February. Total nonfarm payroll employment increased by 162,000 in March after declining by 14,000 in February. Manufacturing employment also increased in March, growing by 17,000; and average weekly hours worked in manufacturing rose to 41.0 in March from 40.5 in the previous month.

The sales, orders, and inventories category also made a positive contribution to the index in March, contributing +0.06 for the second consecutive month. In contrast, the consumption and housing category’s contribution to the index remained negative; this category contributed –0.42 in March, down slightly from –0.41 in February.

Housing starts and building permits improved modestly in March, but both remained well below their historical averages.

What's strange in there is no mention the original February 2010 CFNAI was -0.64, now revised.

What's the point? There is clearly no V recovery happening, although things are improving. Unfortunately people mistake a V with coming out of the abyss. The coming from the abyss is not recovery for as one can see, there are absolute threshold levels to justify a V economic recovery shape. A Mariana Trench exit is not the same as getting one's head above water.