U of I Flash Index up to 104.6 in February

March 1, 2018

U of I Flash Index up to 104.6 in February

Second consecutive increase; at highest level since May 2017

Authors

The University of Illinois Flash Index rose in February for the second straight month, climbing to 104.6 from 104.4 the previous month. The February reading is a half point higher than December and puts the monthly indicator of Illinois’ economic condition at its highest level since May 2017.

“The Illinois economy is benefitting from a continuing strong national economy,” said economist J. Fred Giertz, who compiles the index for the university’s Institute of Government and Public Affairs. “The first quarter of 2018 appears not to be experiencing the weakness of the past several winters although growth will likely be slower than the last three quarters of 2017.”

The Illinois unemployment rate, another reflection of economic stability, remained unchanged in February at 4.9 percent, Giertz said. This was well above the national rate of 4.1 percent, but still very low by historical standards.

Giertz has compiled the Flash Index, which is based on Illinois’ monthly tax receipts, since 1995 and has calculated it dating back to 1981 (view the complete archive). Readings above 100 indicate economic growth while readings below 100 indicate a contraction in the economy. The index has hovered in a range between 103.9 and 104.8 since August 2016.

All three components of the index (individual income tax, corporate tax and sales tax receipts) were up for February compared to the same month in 2017 after adjusting for inflation. Federal tax changes may affect future state income and corporate tax revenue because of the link between federal and state tax base, Giertz said. These changes may affect the index temporarily in unforeseen ways, he 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, 2018.


Research Area: Economic Policy

Policy Initiative: Flash Index

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