March U of I Flash Index declined slightly.

Urbana – The U of I Flash Index for March 2023 fell slightly from 103.4 in February to 103.1 in March. This continues the pattern of the last six months of modest growth in the shadow of the threat of an impending recession. Any index value above 100 indicates expansion. 

“The Illinois and national economies appear to have the withstood the uncertainty of the recent banking problems.”

The unemployment rate in Illinois stands at 4.5%, near the post-recession low. The Illinois rate is still above the national average, but the differential decreased slightly last month. The wait for the anticipated recession later this year continues with experts placing the odds at about fifty-fifty, providing little guidance about the future. The outcome may depend on whether the inflation rate continues to fall so that steep rate increases will not be required by the Federal Reserve. 

The three main components of the Index (individual income, corporate, and sales tax receipts) were all down slightly in inflation-adjusted terms from March 2022. However, that month in 2022 saw unusually strong receipts.

“Real tax receipts for the last twelve months are still running ahead of the previous twelve-month period.” 

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 then calculated for the 12-month period using data through January 31, 2023.  Nearly 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.

April 5, 2023