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Flash Index of Economic Growth continues gradual slowing

J. Fred Giertz, Institute of Government and Public Affairs
(217) 244-4822

Mark Reutter, Business Editor
(217) 333-0568; mreutter@illinois.edu

12/12000

EDITORS, NEWS DIRECTORS: The Flash Index of Economic Growth, produced by economists at the University of Illinois, is based on the most up-to-date information on the state economy.

CHAMPAIGN, Ill. -- The University of Illinois Flash Economic Index dropped again in November, giving fresh evidence that the Illinois economy is slowing.

The November index was 101.9, down from 102.8 in October and 103.5 in September. The Index is at its lowest level in more than a year. More important, there have been only two lower monthly readings in the last eight years.

"While the state economy still shows positive growth, the latest figure is a clear indication that the economy is running down after a decade of steady expansion," said J. Fred Giertz, a UI economist who released the Flash reading today (Dec. 1).

A year ago in November, the Flash Index was 102.7; in November 1998 it was 104.4.

"But it should be emphasized that there is no evidence of a recession. The key question now is whether we are achieving a Ôsoft landing,Õ as desired by the Federal Reserve Bank, or whether this will lead to a more significant slowdown."

As true in recent months, corporate-tax receipts were the weakest component of the Flash Index. Lower-than-expected corporate profits have been a significant factor in the sharp declines in the stock market.

The Flash Index is a weighted average of growth rates in sales-tax receipts, individual income-tax receipts and corporate-earning receipts in Illinois. The receipts 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 Nov. 30. Any reading above 100 means the state economy is expanding, while any number below 100 indicates the economy is declining.