URBANA, Ill. – The U. of I. Flash Index declined in March to 105.1 from its 105.6 level in February. The current reading is the lowest in three years. (March 2013 was 104.7, see archive). While the Illinois economy is still growing, as 100 is the dividing line between growth and decline, the state still lags behind the rest of the nation.
“A disturbing trend is emerging with Illinois falling further behind the national economy,” said J. Fred Giertz, who compiles the index for the University of Illinois Institute of Government and Public Affairs.
Until recently, the gap was closing between the state and national unemployment rate. A year ago, Illinois’ rates was only one-half of a percentage point above the national level (6.0 percent versus 5.5 percent). In the last year, Illinois’ rate has increased to 6.4 percent while the national rate has dropped to 4.9 percent – a divergence of 1.5 percentage points.
The index is unable to isolate the impact of the continuing state budget impasse from other factors. However, Giertz said there is growing anecdotal evidence that the standoff is slowing the economy.
“In the early months of the impasse, many organizations dependent on state support such as higher education and human service providers were able to buffer the negative impacts. This is no longer the case,” Giertz said. “Further, the general uncertainty of the process with the likelihood of future tax increases has a dampening effect on economic activity.”
Individual income tax and corporate tax receipts compared with the same month last year (after adjusting for inflation) were down considerably, while sales tax receipts were slightly higher.
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 March 31.
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