U of I Flash Index ends 2020 with continued, gradual recovery

January 4, 2021

U of I Flash Index ends 2020 with continued, gradual recovery


After a pause in November, the University of Illinois Flash Index continued its slow climb to finish the year, rising to 95.9 in December from its 95.6 level the previous two months. 

This the highest reading since the precipitous decline that resulted from the COVID-19 pandemic in March. However, the index is still almost 10 points below the pre-crisis level, and it remains below the 100-dividing line between growth and decline. See the full Flash Index archive.

“In one sense, 2020 was a devastating year for the Illinois and national economies. Unemployment rose from a historic low of less than 4% to nearly 15% in just a few weeks,” said University of Illinois economist J. Fred Giertz, who compiles the monthly index for the University of Illinois System's Institute of Government and Public Affairs. “However, from another perspective, the economy’s resilience has been remarkable. Few observers would have predicted in April that the unemployment rate would fall below 7% before the end of the year.”

The Illinois unemployment rate exceeded the national rate by 2.5 percentage points after the onset of the crisis, but it is now near that of the rest of the nation. The recovery of the financial markets has been even more impressive.

Recovery is far from complete, and Giertz said that the process is not fully understood. It is likely the result of an unusually strong pre-crisis economy along with prompt and aggressive intervention on both the fiscal and monetary fronts. The surprisingly fast development of a vaccine has bolstered expectations even as the disease has persisted.

For the month, all three components of the index (corporate, individual income and sales tax receipts) exceeded the levels of the previous December after adjusting for inflation. For the year, receipts for Illinois’ three major taxes were below pre-crisis forecasts, but well above post-crisis predictions of a revenue disaster.

The Flash Index is normally 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 December 31, 2020. Ad hoc adjustments have been made to deal with the timing of the tax receipts resulting from state and federal changes in payment dates beginning in March.



Research Area: Fiscal and Economic Policy

Policy Initiative: none