A key indicator of the Illinois economy has dropped to its lowest level in more than three years. The UI Flash Index for March fell to 103.4 after rising the previous two months.
The Flash Index, which is the first barometer of the condition of Illinois’ economy each month, was at 104.1 in February and 103.8 in January. The last time it was as low as 103.4 was February 2005, said economist J. Fred Giertz of the university’s Institute of Government and Public Affairs.
The March reading suggests a slowing economy but not necessarily a recession, Giertz said.
“The determination of a recession, either nationally or at the state level, is not based on any one month’s results, but on the performance over several months,” he said. “The next few months will determine whether the current situation is just a slowdown or a recession.”
The Flash Index fell during the last half of 2007 from 106.8 in July to 103.6 in December before climbing back slightly in January and February. The index is constructed so that a reading of 100 marks the division between economic expansion and contraction.
In March, corporate and sales tax receipts in Illinois were up slightly in real terms compared to the same month a year ago, while individual income tax receipts were down somewhat. With the April 15 filing deadline approaching, individual income tax receipts may be influenced by 2007 capital gains that have been largely dissipated by the recent stock market downturn but have not shown up yet in calculations.
The UI 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 March 31.
