Monthly Economic and Fed Policy Report

Location: Chicago
Author: Eric C. Banfield, FRM, CRP, PRM
Date: Wednesday, October 4, 2006

View summary of key economic indicators. See detail behind Real Growth Index (RGI) and 'E/M' Index (used in daily Fed Funds Report). RGI, designed to proxy bond market perceptions, updates monthly (vs. quarterly GDP), identifies recessions precisely, and correlates with other indices (e.g., ISM). Multivariate model projects RGI 3 months out. 'E/M' section reveals conditions empirically consistent with FOMC rate moves. Charts show 'E/M' history against Fed moves; RGI, money, and prices since 1960; and RGI Index relative to model forecast.