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Flash Index of Illinois Economy rose moderately in August

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

9/5/2006

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 U. of I. Flash Index of the state economy moved up in August to 106.4 from its 106.1 reading in July.

The index remains in 105-107 range it has occupied for the past 17 months. The Illinois economy, similar to the national economy, is moving forward at a moderate pace as might be expected for this stage of the expansion that began after the 2001 recession.

The Federal Reserve is now dealing with the “too hot-too cool” problem with concerns that the overheating of the economy may lead to inflation while also worrying that raising interest rates may slow the economy unnecessarily.

Recently, the Fed has decided by leaving interest rates unchanged that the economy is neither too hot nor too cold.

All three components of the index – individual income-tax, corporate-tax, and
sales-tax receipts – were up modestly in real terms from the same month last 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 is then calculated for the 12-month period using data through Aug. 31.