The University of Illinois Flash Index broke a nine-month string of declines in May, rising one-tenth of a point to 94.1. The first monthly barometer of the Illinois economy had declined each and every month since August 2008, falling in April to its lowest reading in more than six years.
“The slight increase does not mean the end of the recession since a reading of 100 for the index is the dividing line between growth and decline,” said economist J. Fred Giertz, who compiles the Flash Index for the University’s Institute of Government and Public Affairs. “Instead, it suggests that the rate of decline in economic activity in Illinois is slowing. Even optimistic forecasts do not expect an economic expansion until late this year or early in 2010.”
Since November 2008, the index had declined by more than a point each month, continuing a string of declines that began in July 2007. The April 2009 reading of 94.0 was the lowest since an index of 92.2 in February 1992. The index fell to 94.2 in May 2002, coming out of the 2001 recession, before starting an upward trend that took the Flash Index to its all-time high of 107.4 in April 2007.
In real terms, individual income tax receipts in May, following April’s pattern, were down markedly from the same month last year. Also similar to last month, consumer spending represented by sales tax collections was down, but by a much smaller percentage amount. Corporate tax receipts were surprisingly strong with a substantial increase in real terms compared to one year ago.
“This reinforces a national result where the Bureau of Economic Analysis found that profits were up during the first quarter of 2009,” 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 May 31, 2009.
