June U of I Flash Index Fell Slightly

URBANA — The University of Illinois Flash Index for June 2023 fell slightly to 103.0 from 103.2 in May. The economy remains in a holding pattern where concern about a recession is balanced against reports of continuing strength, evidenced by higher-than-expected first-quarter GDP growth and surprisingly low unemployment rates.

Any index value above 100 indicates expansion.

“The rate of inflation continues to decrease although not as fast as the Federal Reserve would like. This implies that the Fed may still raise interest rates to address inflation concerns which may slow the economy further.”

Illinois’ unemployment rate fell slightly to 4.1 %, only four-tenths of a percentage point above the national rate—the smallest difference since the Covid-induced recession. At one point, the differential was nearly 2 percentage points.

June Illinois state tax revenues from individual, corporate, and sales taxes (components of the Flash Index) were all down in inflation-adjusted terms compared to the same month last year.

“June 30 marked the end of the state Fiscal Year 2023. For the fiscal year, individual income tax and sales tax revenues were down slightly in real terms while corporate receipts were up. This is not surprising because tax receipts for the previous fiscal year were unusually strong, in part the result of unprecedented federal stimulus spending.”

The Flash Index is 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 calculated for the 12-month period using data through June 30, 2023. Over three 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 in recent years.

July 5, 2023