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U of I Flash Index holds at 97.8 in July
August 1, 2011 _ After 13 consecutive months of increase, a key indicator of the economy in Illinois stalled in July. The University of Illinois Flash Index held steady at 97.8, reports economist J. Fred Giertz, who compiles the index for the Institute of Government and Public Affairs.
“Even though there was no increase, the unchanged reading may be viewed in a positive way, since other measures of the Illinois and national economy have been negative recently,” Giertz said.
Unemployment increased in June in Illinois and nationally over the previous month, and there was only a modest increase in the Gross Domestic Product in the second quarter of the year, Giertz said.
A reading of 97.8 means the Illinois economy is still in a state of decline. Readings below 100 indicate contraction of the economy, while a reading of 100 or above signals economic growth. The Flash Index reached a recession low of 90.0 in September 2009, and had climbed each month since May of last year.
“Some observers have suggested that these results are transitory because of the impacts on supply chains resulting from the earthquake and tsunami in Japan and because of a spike in energy prices,” Giertz said of the July index. “Only time will tell if this analysis is correct.”
After adjustment for the individual and corporate income tax rate increases earlier this year, individual and corporate income tax receipts were down slightly in real terms compared to the same month last year while sales tax receipts were up.
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 July 31, 2011.