National Financial Conditions Index (NFCI)
The Chicago Fed’s National Financial Conditions Index (NFCI) provides a comprehensive weekly update on U.S. financial conditions in money markets, debt and equity markets, and the traditional and “shadow” banking systems. Because U.S. economic and financial conditions tend to be highly correlated, we also present an alternative index, the adjusted NFCI (ANFCI). This index isolates a component of financial conditions uncorrelated with economic conditions to provide an update on financial conditions relative to current economic conditions. Watch a videotaped interview with the economist for some background.
Latest NFCI Data
The NFCI and ANFCI are updated on a weekly basis at 8:30 a.m. ET on Wednesday, and cover the time period through the previous Friday. When a federal holiday falls on a Wednesday or earlier in the week, the NFCI and ANFCI will be updated on Thursday.
Continuing Recent Trend, Financial Conditions Improve in Week Ending Feb 10
The NFCI edged lower to -0.46 and the ANFCI decreased to 0.07 in the week
ending February 10.
Download the data.
Reading the NFCI
The National Financial Conditions Index (NFCI) and adjusted NFCI (ANFCI) are each constructed to have an average value of zero and a standard deviation of one over a sample period extending back to 1973. Positive values of the NFCI indicate financial conditions that are tighter than on average, while negative values indicate financial conditions that are looser than on average. Similarly, a positive value of the ANFCI indicates financial conditions that are tighter on average than would be typically suggested by economic conditions, while a negative value indicates the opposite.
The history of the NFCI and the ANFCI can change from week to week depending on incoming data, data revisions and changes in the estimated weight given each financial indicator, although the latter tend to be very small. Because they include a number of monthly and quarterly financial indicators that are regularly revised, revisions to the NFCI and ANFCI will tend to be more pronounced near the beginning of each month. The ANFCI is additionally influenced by economic growth and inflation, as captured by the three-month moving average of the Chicago Fed’s National Activity Index (CFNAI-MA3) and three-month total PCE inflation. As a result, it will tend to show larger revisions to its history over time.
Revisions to the ANFCI can be largely attributed to differences between incoming data on economic growth and inflation and their expectations based on the historical dynamics of the index. A downward revision to the ANFCI can be seen as stemming from one or both of the following factors: a lower than previously expected level of economic activity and a higher than previously expected rate of inflation. An upward revision to the ANFCI can be seen as stemming from one or both of the following factors: a higher than previously expected level of economic activity and a lower than previously expected rate of inflation.
