U of I Flash Index shows strong uptick in March

April 1, 2021

U of I Flash Index shows strong uptick in March

Authors

The March University of Illinois Flash Index showed marked strength, rising to 97.8 from its 96.6 level in February. This reading was the result of both an improving economy and certain technical factors. 

“March of last year was the first month when the impact of the COVID crisis began to be felt,” said University of Illinois economist J. Fred Giertz, who compiles the monthly index for the University of Illinois System's Institute of Government and Public Affairs (IGPA). “Therefore, the current inputs for March 2021 used to compile the index appear stronger than usual since they are being compared to the depressed numbers of last year.” See the full Flash Index archive.

The combination of continued federal spending and the increasing availability of the vaccine explain the other aspect of the recovery. Unlike many recessions, this recovery is marked by strong pent-up demand accompanied by substantial savings. Despite its recent upward trajectory, the index remains below the 100-dividing line between growth and decline.

The Illinois unemployment rate continued its decline after stalling for three months. However, it is still more than a percentage point above the national average. All three components of the index (corporate, individual income and sales tax receipts) exceeded the levels of the same month in 2020 after adjusting for inflation.

The Flash Index is normally 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 March 31, 2021. Even though a year has passed, ad hoc adjustments are still needed to deal with 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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