U of I Flash Index slippage continues in February
The economy in Illinois continues to slip but there may be some reason for optimism in comparison to other states, according to the author of the University of Illinois Flash Index.
The index, which is the first monthly barometer of the performance of the state’s economy, slipped to 96.3 in February, down from 97 in January, reflecting the fact that Illinois is not escaping the effects of the global recession. But U of I economist J. Fred Giertz, who compiles the Flash Index for the Institute of Government and Public Affairs, says there is some good news.
“So far, Illinois seems to have been affected less severely by the recession compared to the rest of the country,” Giertz said. “During 2008, Illinois’ unemployment rate rose 1.6 percentage points to 7.2 percent, while the rate for the whole country rose 2.3 percentage points, ending the year at 7.2 percent as well.”
Even so, the current recession is the worst since the early 1980s and it appears the low point has not yet been reached, Giertz said.
“It is difficult to predict the end of the recession, which officially began in November 2007,” he said. “Most recessions don’t last more than 18 months, but the current one is deeper than average.”
The Flash Index has now spent three consecutive months under 100, which is the dividing line between economic growth and contraction. The reading of 96.3 is the lowest since September 2003, when the index reached 96.2.
As was the case in January, real receipts for individual income tax, corporate tax and sales tax, the three components of the Flash Index were down compared to the same month a year ago, Giertz said.
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 28, 2009.
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