Flash Index: August 2016

September 1, 2016

Flash Index: August 2016

Slow rate of national economic growth is reflected in Illinois


The University of Illinois Flash Index for August rose slightly to 104.8 from its 104.7 level in July. The index has hovered in the high 104 to low 105 range all year. This means that the Illinois economy is growing (100 is the dividing line between economic expansion and contraction), but more slowly than it did last year.

“The index, and therefore the state’s economic growth, has experienced a lower plateau this year than in 2015,” said J. Fred Giertz, who compiles the index for the University of Illinois Institute of Government and Public Affairs. In 2015, the index hovered in the 106-107 range for much of the year.

The slower growth rate of the Illinois economy in 2016 reflects the trend in the national economy. The U.S. growth rate hovered near 1 percent during the first two quarters of the year. In comparison, after the 2007-2009 recession, the growth rate was 2 percent—which many observers called sluggish. And we should not expect a significant uptick ahead. “Most observers expect growth during the remainder of 2016 to be somewhat stronger, but still modest,” Giertz said.

The state unemployment rate fell to 5.8 percent, down from 6.2 percent last month and unchanged from one year ago. It is still nearly a percentage point above the national average.

Individual income tax and sales tax receipts were up for the month while corporate tax revenues were down from the same month last year after adjusting for inflation.

The Flash Index is a weighted average of Illinois growth rates in corporate earnings, consumer spending and personal income. Tax receipts from corporate income, personal income and retail sales 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 August 31, 2016.

Research Area: Fiscal Health of Illinois

Policy Initiative: none