U of I Flash Index rises in December

January 3, 2017

U of I Flash Index rises in December

First rise in four months

Authors

The University of Illinois Flash Index ended a three-month fall in December, rising to 104.3 from its 104.1 level in November. The indicator of economic activity in Illinois ended 2016 more than a point lower than it closed the previous year. (See Flash Index archive.)

The index remained relatively steady throughout 2016 in the 104.1 to 105.5 range, reflecting slower growth than previous years. This is consistent with the slow growth of national GDP during the first half of the year. However, preliminary results for the second half of the year (including strong holiday sales) suggest that growth is now somewhat stronger, said economist J. Fred Giertz, who compiles the monthly index for the university’s Institute of Government and Public Affairs.

“2017 begins with considerable uncertainty regarding the economy,” Giertz said. “At the national level, the incoming Trump Administration’s evolving economic policy elicits both hope and fear, while the Illinois budget impasse enters its third year. Clearly the short and longer term impacts of Illinois’ budget predicament are slowing the state’s economy.”

Economic growth in Illinois was stronger in 2014-2015 when the index was above 106 most of that time, Giertz said. The Illinois unemployment rate in December was a relative bright spot at 5.6 percent compared to 6 percent a year earlier.  However, the state’s rate remained well above the national level of 4.6 percent.

Sales tax receipts in December were up from the same month last year after adjusting for inflation while individual income tax receipts were down slightly.  As noted the past two months, corporate tax receipts remain difficult to interpret because of changes in the reporting procedures at the Department of Revenue.

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 December 31, 2016.


Research Area: Economic Policy

Policy Initiative: Flash Index

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