The Flash Index has remained in this narrow 102.1 to 102.3 range for the last four months, which suggests that the Illinois economy continues to reflect the national slowdown in growth, but is still not declining, says economist J. Fred Giertz, who compiles the monthly index for the university’s Institute of Government and Public Affairs. A reading above 100 indicates growth in the state.

 

“There is concern that the national economy will slow significantly in the third quarter after a surprisingly robust 3.3 percent growth rate of GDP during the second quarter, which was spurred in part by the tax rebates offered by the government,” Giertz said. “There is also concern that a slowing world economy along with the rebounding dollar will slow export growth, which has helped the U. S. and Illinois economy during the problems with the financial sector. As yet, this is not reflected in the Flash Index.”

 

Concern remains that weakness in the financial sector will drag the rest of the economy into a full-blown recession, Giertz said.

 

“Unfortunately, unpleasant financial surprises may still be ahead,” he said. “Many analysts argue that recoveries from slowdowns and recessions caused by financial uncertainty last longer than more normal downturns.”

 

Two of the three components of the index, individual income tax and sales tax receipts, were down in real terms from the same month last year. Corporate tax receipts were up.

 

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 Aug. 31, 2008.