The Illinois economy continues to slide along with the national economy, according to the UI Flash Index.
The first monthly barometer of the state’s economy dropped to a reading of 100.0 for November, continuing a decline that began in July 2007. The index was at 100.6 in October.
A Flash Index level of 100 marks the dividing line between economic growth and economic decline. The index has not fallen to the 100 level since July 2004 and has not been below that mark since March 2004.
It reached a post-2001 recession peak of 107.4 in April of last year. More important than the index dropping to 100 is the absence of any signal that the downward spiral will end soon, said UI economist J. Fred Giertz, who compiles the Flash Index for the university’s Institute of Government and Public Affairs. “There is nothing unique in regard to the Illinois economy,” he said. “The U.S. economy is almost certainly in recession and most other economies around the world are in a similar situation. “The question now is not if there will be a recession, but how long and deep it will be,” Giertz said.
Most observers now expect the downturn to be more severe than the mild recessions of 1990 and 2001, but less damaging than the twin recessions of the early 1980s when unemployment reached double-digit levels for the only time since the 1930s, Giertz said. Individual income taxes and sales tax receipts were down markedly in real terms in November from the same month last year. Corporate tax receipts, the third component of the Flash Index, were up because of an anomaly resulting in very low receipts in November of 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 Nov. 30.
