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U. of I. Economic Index indicates economy growing, but at slower pace

Mark Reutter, Business & Law Editor
217-333-0568; mreutter@uiuc.edu


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

5/1/2006

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 Illinois economy.

CHAMPAIGN, Ill. — The University of Illinois Flash Economic Index fell again last month to 105.1 from its 105.9 reading in March.

The index, which tracks the growth rate of the Illinois economy, has dropped 2 full points from an eight-year high in January 2006.

A word of caution is in order. The economy is still growing, but at a slower pace than in the second half of 2005 and in early 2006. An index reading of 100 is the dividing line between economic growth and contraction.

“The state economy seems to be somewhat out of sync with the national economy,” J. Fred Giertz, the Illinois economist who compiles the Flash Index, said today. “For the national economy, growth slowed in the fourth quarter of 2005 and then accelerated in the first quarter of this year. As measured by the Flash Index, the Illinois economy did just the reverse.”

The results of the last three months are cause for concern, Giertz added. “In 2005, Illinois made up some of the lost ground that took place in the three years that followed the 2001 national recession,” he said. “2005 was an encouraging year. So far, 2006 is not.”

The Flash Index is a weighted average of state growth rates in consumer spending, corporate earnings and personal income. Tax receipts from these categories 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 April 30.