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U of I Flash Index continues steady improvement; Climbs to 96.1 in February

The Illinois economy continues to recover from recession, but the pace of that recovery remains painstakingly slow as measured by the University of Illinois Flash Index.

The Illinois economy continues to recover from recession, but the pace of that recovery remains painstakingly slow as measured by the University of Illinois Flash Index.

The Flash Index, which uses state tax receipts to gauge the Illinois economy each month, reached 96.1 in February. The improvement from 95.9 the previous month stretched the string of continuous improvement to 10 consecutive months, but the two-tenths of a point increase was the smallest during this period.

The Flash Index was last above 96 in February 2009 when it was on its way to a recession-low of 90.0 in September of that year.

“Note that the recession technically ended in June 2009, even though unemployment remains extremely high and the index has yet to reach 100, which marks the division between economic decline and growth,” said U of I economist J. Fred Giertz, who compiles the Flash Index for the University’s Institute of Government and Public Affairs. “Slow recoveries are typical in recessions accompanied by a financial panic as occurred in the fall of 2008.”

Similar to the issues encountered with the tax amnesty in November 2010, the determination of the index in February was complicated by the impacts of the recent individual and corporate income tax increases, Giertz said. The revenue numbers for February represented both changes in economic activity as well as the impact of higher tax rates, so it was necessary to disaggregate the two impacts, he said.

The full impact of the tax increase approved by the General Assembly in January may take several months to become fully incorporated in the revenue numbers, Giertz said.

The Flash Index is a weighted average of Illinois growth rates in corporate earnings, consumer spending and personal income. Tax receipts from corporate income, personal income and retail sales are adjusted for inflation before growth rates are calculated.

The growth rate for each component is then calculated for the 12-month period using data through February 28, 2011.

 

 

Flash Index Title

The State of the Illinois Economy

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