URBANA, Ill. – The University of Illinois Flash Index, which tracks economic activity in the state, fell for the second consecutive month in April, dropping to its lowest level since December 2012.
The April index of 104.7 is a decline of four-tenths of a point from March, and represents a fall of nearly one full point since February. While remaining above the 100 mark, which divides economic growth and contraction, the decline indicates growth is slowing significantly.
“Both the national and Illinois economies have experienced slow growth so far in 2016,” said economist J. Fred Giertz, a U. of I. professor emeritus who compiles the index for the Institute of Government and Public Affairs. “Following the pattern since 2014, growth was weak in the first quarter at one-half of 1 percent. In 2014 and 2015, the slow first-quarter growth was explained by unusually severe winters. This was not the case this year, when the slow growth seems to be the result of real weakness.”
The Illinois economy continues its underperformance in comparison to the country as a whole. A year ago, Illinois’ unemployment rate stood at 5.9 percent compared with the national rate of 5.5 percent. In the last year, Illinois’ rate increased to 6.5 percent while the U. S. rate fell to 5 percent.
“Illinois’ anemic performance coincides with the state’s fiscal impasse. While the Flash Index cannot isolate this impact, it is a possible explanation for a least of portion of this underperformance,” Giertz said.
Comparisons for the individual income and corporate taxes between April 2015 and 2016 are made more difficult because of the reduction in the two rates in January 2015, he said. Payments that accompanied state tax returns filed in 2015 were unusually high compared to this year.
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 was then calculated for the 12-month period using data through April 30.