February U of I Flash Index drops after months of steady increases

The February University of Illinois Flash Index retreated slightly from its stable, upward pace last month, falling to 105.7 from 105.9 in January.  

Last month's index reading is above the 100-level dividing line between economic growth and decline. Illinois' economy and the national economy remain strong, despite lingering COVID-19 challenges, as well as supply chain problems and inflation—both of which appear more persistent than originally believed. The Russian incursion into Ukraine is too recent to impact the February index. 

“There is a growing consensus that the economy is now overheated as evidenced by high recent inflation rates,” said University of Illinois economist J. Fred Giertz, who compiles the monthly index for the Institute of Government and Public Affairs. “The challenge the Federal Reserve faces is to rein in inflationary pressures with as little impact as possible on the real economy. The fine-tuning necessary for a so-called soft landing is a daunting task.”

While state revenues have been extremely strong this fiscal year to date, February revenues were mixed with corporate receipts up from the same month last year after adjusting for inflation while individual income and sales tax revenues were down slightly. See the full Flash Index Archive.

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 February 28, 2022. Nearing 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.

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