URBANA – The University of Illinois Flash Index -- first indicator of the state’s economy each month – continued its downward trend in May, falling to 102.3. The index dropped five-tenths of a point from its reading in April and reached its lowest point since September 2004, when it was at 102.2.

The 102.3 Flash Index reading in May was 4.3 points lower than a year earlier. This drop from 106.6 suggests a continued and substantial slowing of the Illinois economy, U of I economist J. Fred Giertz, who compiles the Flash Index for the university’s Institute of Government and Public Affairs.

The index, however, remains well above the 100 level, which is the dividing point between economic growth and decline.

“It is still touch and go as to whether a recession can be avoided,” Giertz said. “There is some optimism that the worst may be over, but over the past year, every sign of optimism was followed by another new problem for the economy.”

The Flash Index has not been below 100 since March 2004. The index has been compiled since 1995, with historical figures computed back to 1981.

Two components of the index, individual income tax and sales tax receipts, were down in real terms from the same month a year ago. Corporate tax receipts, the third index component, were higher.

The Flash Index is a weighted average of growth rates in Illinois 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 April 30, 2008.

The index is computed for the Institute of Government and Public Affairs, which helps to improve public policies and the performance of government by conducting and distributing research on public policy issues and the public decision-making process.