The numbers: The U.S. economy contracted in February for the first time since the worst phase of the coronavirus pandemic last April, according to the Chicago Fed’s national activity index released Monday.
The index, which is designed to gauge overall U.S. economic activity, fell to negative 1.09 in February from a revised positive 0.75 in the prior month.
A zero value of the index indicates the national economy is expanding at its historic trend rate of growth.
The January reading was revised from an initial estimate of 0.66.
What happened: The three-month moving average, which is designed to smooth volatility, decreased to negative 0.02 last month from positive 0.46 in January.
The Chicago Fed index is a weighted average of 85 economic indicators. Only 34 of the indicators made positive contributions last month.
Production-related indicators contributed negative 0.85 to the index in February, down from positive 0.37 in January. Winter storms played a part in industrial production falling 2.2% in February.
The personal consumption and housing category contributed negative 0.29 to the index last month, down from positive 0.27 in January.
Big picture: With all the talk about how well the economy might do in the second half of the year, there is not much attention on the struggles of growth in the first quarter. The data suggest that the Biden $1.9 trillion stimulus package was more timely than assumed.
Market reaction: Equities were set for a mixed open on Monday following losses for all three major benchmarks