May U of I Flash Index shows continued recovery

June 1, 2021

May U of I Flash Index shows continued recovery


The May University of Illinois Flash Index continued its robust recovery, with an increase to 105.3 from its 101.5 level in April. As with April, the increase was one of the largest in the index’s 26-year history.

The recent precipitous increases in the Flash Index need to be put in context. The index is not an absolute reading on the size of the economy. It is a measure of relative recent growth, with the 100-level dividing growth and decline. Comparisons of April and May 2021 are made to the same months in 2020 that were severely depressed by the COVID-19 crisis. See the full Flash Index Archive.

“The Illinois and national economies are growing, having nearly recovered their pre-crisis levels of output. However, the picture is complicated by the fact that employment is still well below the pre-crisis levels,” 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). “Unemployment is known to be a lagging indicator in normal times. With the stimulus payments  and expanded unemployment benefits, unemployment is not falling as rapidly as the broader performance measures would suggest.”

Unemployment in Illinois is now at 7.1% compared to a low of 3.6% in early 2000 and a high of 16.4& in April of last year.Not surprisingly, state tax receipts were up spectacularly in May compared to the same month last year after adjusting for inflation. Individual income and corporate receipts were up over 100% while sales tax receipts were 50% over last year.

“The Flash Index does not predict the future, but there is every indication that strong growth will continue at least through the end of this year, given the continued reopening of the economy,” Giertz said.

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 May 31, 2021.

Even though more than a year has passed since the start of the 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