The U.S. economy hit the skids in April as the national shutdown to curb thetook hold in force, with a measure of the nation's economic activity plummeting to its worst reading since the Federal Reserve Bank of Chicago began its tracking in 1967.
Led by drops in production and employment-related indicators, the Chicago Fed National Activity Index was minus 16.74 last month, down from a downwardly revised minus 4.97 level in March, according to the data released on Tuesday.
The index is made of 85 economic indicators derived from four main categories, all of which fell from March. They are production and income; employment, unemployment and hours; personal consumption and housing; and sales, orders and inventories. A positive index reading aligns to growth above trend while a negative reading corresponds to below-growth trend.
The index's three-month moving average fell to minus 7.22 in April from minus 1.69 in March. After a time of economic expansion, a greater likelihood of a recession is historically tied to the three-month average falling below minus 0.70, according to the Chicago Fed.
According to the Labor Department,workers filed for jobless benefits in the last 10 weeks. And while economic growth has edged up slightly in the past two weeks, "the return to economic normality is likely to be a slow and bumpy process," Fitch Ratings chief economist Brian Coulton said in a report.
"Pre-virus levels of GDP are unlikely to be reached until mid-2022 in the U.S. and significantly later in Europe. This is despite massive policy stimulus," Coulton said.