URBANA — The University of Illinois Flash Index fell in June, declining to 105.5 compared to 105.7 in May. (Note: The June Index was calculated using incomplete revenue data for the month because of the unavailability of final June totals on the Comptroller’s website.)
The lower index reading does not mean the Illinois economy is contracting because any reading above 100 indicates growth.
“Illinois and the national economies remain in a holding pattern with current economic activity remaining relatively strong while the threat of future problems elicits increasing concern,” said University of Illinois economist J. Fred Giertz, who compiles the monthly index for the Institute of Government and Public Affairs.” “A year ago, the economy was in a surprisingly strong recovery from the Covid-19 crisis with inflation viewed as a transitory problem. This is no longer the case today. Most observers now believe the Federal Reserve’s actions to rein in inflation will slow the economy with a recession in future months a real possibility.”
Giertz said that the Economic indicators are giving conflicting signs. Leading indicators such as the equity markets reflect concern while lagging indicators such as the unemployment rate remain strong with unemployment remaining at a post-recession low. The Flash Index is designed to be a contemporaneous index and as such, has not declined significantly. Some observers have likened the current situation to waiting in calm weather for an approaching storm that may bring severe damage but may also weaken or even dissipate. See the full Flash Index archive.
“The state of Illinois closed the fiscal year with strong tax revenue growth even after accounting for the impact of inflation. This has been the source of the strength of the Flash Index during the year”
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 June 30, 2022. After more than 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.
The lower index reading does not mean the Illinois economy is contracting because any reading above 100 indicates growth.