Flash Index: July 2016

August 1, 2016

Flash Index: July 2016

Slow-down in state’s economic growth reflects weak national GDP in first two quarters of this year

Authors

The University of Illinois Flash Index fell to 104.7 in July from its 105.0 level in June. This indicates that the state’s rate of economic growth is slowing. The slow-down aligns with concern about the national economy.

National gross domestic product (GDP) growth for the first two quarters of this year was weak (0.8 percent and 1.2 percent, respectively). “Recent data on the national GDP confirms that the recovery from the 2007-2009 recession has been the most anemic since World War II,” said J. Fred Giertz, who compiles the index for the Institute of Government and Public Affairs.

The last few years have marked a reversal of a trend established in the early years of the recovery. GDP growth had little impact on the rate of unemployment, which remained stubbornly high. More recently, the national unemployment rate has fallen and remained low even with slow overall growth. 

The Illinois unemployment rate fell from 6.4 percent to 6.2 percent in July, while the national rate rose slightly to 4.9 percent. This narrows a long-standing gap between the state and national rates.

Individual income tax and corporate tax receipts were down for the month while sales tax revenue was up from the same month last year after adjusting for inflation.

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 July 31, 2016.


Additional Resources

Research Area: Economic Policy

Policy Initiative: Flash Index

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