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Economy is on Positive––But Slow––Track to Recovery
The University of Illinois Flash Index increased to 99.2 in February, 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 increase comes after a slight dip in January, when the Flash was 98.8, a few points lower than months past.
Although the economy is showing improvement, unemployment rates are likely to keep the recovery on the slow track in the coming year, said J. Fred Giertz, who compiles the index for the Institute of Government and Public Affairs. “The recovery remains relatively weak, especially in regard to unemployment rates. This is especially true in Illinois, where the unemployment rate remains more than a percentage point above the national average,” said Giertz. However, the current state of the economy appears to be on a positive track as concerns about a double-dip recession are receding. “This is a marked contrast to the mood in the second half of 2011,” said Giertz.
After adjustment for the individual and corporate income tax rate increases last year, all three components of the index (individual income tax, corporate tax, and sales tax receipts) were up in real terms compared to the same month 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 February 29, 2012.