U of I Flash Index ends 2021 on a high note, despite Omicron threat

January 5, 2022

 U of I Flash Index ends 2021 on a high note, despite Omicron threat

Authors

In a surprising advance, the University of Illinois Flash Index for December rose to 105.7 from its 105.5 level last month, countering the headwinds caused by the emergence of the Omicron variant of COVID-19.

“This is another example of the resiliency of the Illinois and national economies,” said University of Illinois economist J. Fred Giertz, who compiles the monthly index for the Institute of Government and Public Affairs. “For nearly two years since the onset of the crisis, the economy has been able to weather unprecedented challenges confounding most forecasters.”

All the components of the index (individual income tax, sales tax, and corporate tax receipts) were up compared to the same month last year after adjusting for inflation. Both corporate and sales tax revenues were strong. In fact, sales tax receipts were the highest for any month on record, substantially besting the pre-crisis level of December 2019.

The Illinois unemployment rate continued its decline to 5.7%, 2.4 percentage points below the level one year ago. Unfortunately, Illinois’ rate is still well above the national average of 4.2%.

“Despite the strong month, there is still concern about the impact of the emergence of new virus variants. This has led many forecasters to lower their expectations for 2022, although they remain optimistic,” said Giertz.

The Flash Index is a weighted average of Illinois growth rates in corporate earnings, consumer spending and personal income as estimated from receipts for corporate income, individual income, and retail sales taxes. These 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, 2021. See the full Flash Index archive

Even though more than a year has passed since the beginning of the COVID-19 crisis, ad hoc adjustments will still be needed for some time because of the timing of the tax receipts resulting from state and Federal changes in payment dates both this and last year.

 

 


Research Area: Fiscal and Economic Policy

Policy Initiative: none

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