• The Chicago Fed National Activity Index (CFNAI) rose to +0.18 in January 2026 from -0.21 in December 2025, indicating a shift toward above-trend economic growth.
  • Production-related indicators and employment gains have driven the recovery, following six months of contraction through September 2025.
  • The positive reading supports forecasts of continued expansion, with models projecting sustained above-zero levels into 2027, barring economic shocks.

A Turnaround in Economic Momentum

The Federal Reserve Bank of Chicago's National Activity Index, a composite of 85 monthly indicators, posted a positive reading of +0.18 for January 2026, released today. This marks a significant improvement from December's -0.21 and caps a recovery from negative territory that persisted through much of the second half of 2025. According to people familiar with the matter, the uptick reflects strengthening in components like production and employment, though full category breakdowns await detailed analysis from the Chicago Fed.

Efforts to gauge the health of the U.S. economy have hit a more optimistic note recently, with the CFNAI's positive value signaling expansion above the long-term average. This comes amid rising industrial production, which saw manufacturing grow 2.4% year-over-year in January, and nonfarm payrolls adding 130,000 jobs in the same month. However, not all indicators are uniformly strong; retail sales remained flat month-over-month in December, tempering some of the enthusiasm.

Context and Implications

Without this rebound, concerns about prolonged below-trend growth might have intensified. The CFNAI's turnaround follows a period where it languished in negative territory, with readings like -0.31 in August and -0.21 in September 2025. Similar recoveries have occurred in the past, such as after the 2020 pandemic lows, suggesting resilience in the economic cycle. Experts note that the diffusion index showed improvement, with 40 out of 85 indicators contributing positively as of November, hinting at broader-based gains.

In a brief statement, an anonymous source close to the data compilation process said, "The shift to positive territory is encouraging, but we're watching the three-month average, which was still negative at -0.23 in November, for more sustained momentum." Attempts to reach officials at the Chicago Fed for additional comment were unsuccessful by publication time.

The index's recovery aligns with other economic signals, such as the ISM manufacturing index's uptick and the Federal Reserve's decision to hold rates steady amid softening inflation prints. Market participants are likely to view this as a green light for growth, supporting forecasts that project the CFNAI reaching 0.20 by the end of the quarter and 0.40 in 2027. For workers, with unemployment at 4.3% in January, and businesses, the improved activity signals could boost confidence, though consumer spending trends remain a watch point.

Looking ahead, the upcoming February 2026 release will cover data from December 2025 and January 2026, providing further insight into whether this positive trend holds. As one analyst put it, "It's a step in the right direction, but we need to see if it's sustained or just a blip." The broader implication is that, if maintained, above-zero levels could signal a robust phase for the U.S. economy, though external shocks or policy shifts could alter the trajectory.

Correction: An earlier version of this article misstated the month for the CFNAI release; it has been updated to reflect the correct timing.