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Flash Index posts strong increase, corresponds with drop in Illinois state-wide unemployment

The U of I Flash Index for October increased to 104.0 from its 103.2 level in September. This strong gain brings the index to its highest level since February 2008 (see the full archive here).

For the past year, the Flash Index has only seen modest gains, reflecting the slow and steady growth of the Illinois economy. October’s increase is encouraging, as it corresponds with news that the number employed in the state also reached a post-recession high during the month.

The seasonally adjusted unemployment rate in Illinois fell to 8.8 percent in September from 9.1 percent the previous month and 10.0 percent for the same month last year.

However, these positive signs should be examined cautiously.

“The Illinois rate is still well above the national average of 7.8 percent,” cautioned economist J. Fred Giertz, who compiles the Flash Index for the Institute of Government and Public Affairs. “Even with the recent improvement, the unemployment rate remains at a very high level compared to recent recoveries.”

All three components of the index (individual income tax, corporate tax, and sales tax receipts) were higher in real terms compared to the same month last year with an especially strong performance by corporate taxes.

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 October 31, 2012.