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Flash Index shows economy is finally rebounding from harsh winter
The U of I Flash Index rose slightly in July to 106.2 from its 106.0 level in June. The index has remained in the 106.0 to 106.2 range for the past four months. This indicates that the Illinois economy continues to grow, because the rate has consistently stayed above 100, the dividing line between growth and decline.
“It appears that the national and Illinois economy have rebounded after the severe winter,” said J. Fred Giertz, who compiles the Flash Index for the University of Illinois Institute of Government and Public Affairs.
Recently released preliminary results for the second quarter of 2014 show a 4.0 percent increase in GDP. This is a marked improvement from the more than 2 percent decline that occurred in the first quarter.
“The question now is whether the second quarter momentum will continue the remainder of the year,” Giertz said. “Is the higher growth rate simply a catch up effect after the slow first quarter? Or, has the economy moved into a sustained faster growth environment?”
Employment numbers also brought good news for Illinois. The state unemployment rate fell to 7.1 percent in July. This time last year, the rate was 9.2 percent. However, the Illinois rate remains one percentage point above the national rate.
Both individual income tax and corporate tax receipts were down slightly in real terms from the same month last year while sales tax receipts were ahead of 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 July 31, 2014.