Jan. 3, 2012 _ The University of Illinois Flash Index increased to 99.1 in December, a new post-recession high. The results are the highest reading since November 2008, when the index declined to 100, the dividing line between economic expansion and contraction. The results ended the year on a positive note, reflecting the slow but steady recovery that occurred in 2011.
Although the economy is recovering, it is likely to continue at a slow pace in the coming year, said J. Fred Giertz, who compiles the index for the Institute of Government and Public Affairs.
“The second half of 2011 was considerably stronger than the first half of the year, reducing fears of a double-dip recession. However, predictions for the first half of 2012 suggest a somewhat lower rate of growth,” said Giertz. This will result in a very slow decline in the level of unemployment. A sluggish unemployment rate has been a prime feature of the recovery from the 2007-2009 recession.
After adjustment for the individual and corporate income tax rate increases earlier this year, individual income tax and sales tax receipts were down slightly in real terms compared to the same month last year while corporate tax receipts were up. This is surprising given the reports of the strong holiday sales season. However, sales tax receipts for November and December combined were up significantly from last year.
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 December 31, 2011.
