Urbana – The U of I Flash Index for August declined for the fifth straight month, falling to 104.5 from its 104.9 reading in July.
The lower index reading does not mean the Illinois economy is contracting because any reading above 100 indicates growth.
“Illinois and national economies remain in a kind of twilight world with conflicting signs of both growth and decline,” said University of Illinois economist J. Fred Giertz, who compiles the monthly index for the Institute of Government and Public Affairs. “State revenues, the basic building block of the Index, and the unemployment rate remain relatively strong although losing some momentum while GDP growth the last two quarters has been negative.”
Giertz said that Illinois’ basic tax revenues, the individual income, corporate, and sales taxes, experienced modest growth from the same month last year. However, after adjusting for the recent high rate of inflation, the real increases in the income and sales taxes were near zero although corporate receipts remained strong. The unexpected and spectacular state revenue gains through April of this year appear to be gone with a more normal pattern emerging.
“The Illinois unemployment rate dropped down to 4.4%, a post-recession low. Overall, the Illinois economy continues in a holding pattern.”
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 revenues are adjusted for inflation before growth rates are calculated. The growth rate for each component is then calculated for the 12 months using data through August 31, 2022. After more than two years since the beginning of the COVID-19 crisis, ad hoc adjustments are still needed because of the timing of the tax receipts resulting from state and Federal changes in payment dates.