The U. of I. Flash Index rose to 106.8 in January from its 106.5 level in December. The Illinois economy continues to improve as we enter 2015. This month builds on almost three years of slow and steady growth in which the index remained well above 100, the dividing line between growth and decline.
“The state’s unemployment rate continued a surprisingly strong decline and is getting close to the national rate,” said J. Fred Giertz, who compiles the index for the Institute of Government and Public Affairs. The state’s rate fell to 6.2 percent, compared to 8.9 percent in January 2014. Throughout the recovery, Illinois’ rate has consistently been higher than the national rate. However, it is now only six-tenths of a percentage point above the national average, compared with a 2.2 percentage point differential a year ago.
“While there is considerable optimism concerning the economy, problems in Europe and slow growth in Asia are still a concern,” Giertz said.
Gross domestic product growth in the fourth quarter of 2014 was 2.16 percent. This is slower than expected and considerably below strong performances in the second and third quarters.
The sales tax component of the index was virtually unchanged in real terms from the same month last year. Individual and corporate income tax receipts were down somewhat from one year ago, but comparisons are problematic because both the individual and corporate tax rates declined on Jan. 1 when the state’s 2011 tax increase began to ratchet down. This is further complicated by the fact that some of the January receipts were based on the old higher (5 percent) rate, while the remainder was impacted by the new lower rate (3.75 percent).
The 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 Jan. 31, 2015.
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