The last time I commented on the Chicago Business Barometer (formerly the Chicago PMI) it was over a one-month drop that was quickly erased. That violated a personal rule whereby I make every effort to ignore sentiment surveys as they both do not mean what they are taken for and are usually of dubious value. The reason I commented then was the unusual size in the decline, which was far out of line with results of that time. As it turned out, that was an aberration in the survey.

The latest monthly version of the Chicago Business Barometer far surpassed even last year’s deviation; an outlier that may actually deserve notation and comment. The collapse was not just steep, it was broad-based. The index fell 13.6 points to the lowest level (deepest “contraction”) since July 2009. Again, the 2009 comparisons.

ABOOK Feb 2015 Chicago PMI

Of course, since this is so far out of line with the mainstream view of the economy, and even recent survey results, there has been expressed a heavy dose of utter confusion. The ISM, which publishes this survey, has itself noted both the “West Coast port strike” and, what else, “harsh winter.” I had thought that economists in particular would have to be careful this year after using “harsh winter” so often and so forcefully last year, but apparently three years running will not dull its apparent appeal.

New Orders suffered the largest monthly decline on record, leaving them at the lowest since June 2009. Lower order intake and output levels led to a double digit decline in Employment which last month increased markedly to a 14-month high.

Given Chicago’s central location, it may just be that the oil and gas “miracle” of the past few years is starting to have its negative impact as oil prices have, similarly, not rebounded as expected. This would be more severe than even I would anticipate, but I find it more likely than “harsh winter” Part 3. I also think in addition to energy retrenchment that simply the economy is heading not toward Yellen’s fantasy but rather the direction of wages, retail sales and, relevant to this PMI, capital spending in 2015. I said earlier today in taking apart GDP that I while I didn’t think we are on the edge of an economic cliff that the US economy was likely closer to one than to a “boom.” I guess Chicago wanted to emphasize that point for me.

It’s been a particularly bad week for Janet Yellen’s search for economic corroboration, and this will do her no favors. However, as noted at the outset, this is a back bench indicator and may not in the end be of any importance whatsoever. The only interest I have is how much of an outlier it is, meaning that it requires further confirmation (beyond what we already have in February) including subsequent monthly results. If the index stays down below 50 then next month or two, and is confirmed by other data, then perhaps there is a cliff lurking.