CHAMPAIGN, Ill. Despite the devastating impact of the terrorist attacks, the University of Illinois Flash Economic Index rose slightly last month to 98.2 from 98.0 in August.
The sales-tax component of the Flash Index was weak for September, apparently reflecting the immediate disruptions to the state economy stemming from the Sept. 11 attacks that caused huge financial losses to Chicago-based airlines and disrupted financial service companies with ties throughout Illinois.
Individual and corporate income-tax collections were not immediately affected by the terrorist strikes, although the long-term impacts are of obvious concern.
“Even with the small unexpected increase in the Index in September, the prospects for a national recession are much greater now than before,” said J. Fred Giertz, a UI economist who released the Flash Index today (Oct. 1). “The crucial question in regard to the economy is how long and how deep will be the effects on consumer confidence and business decision-making,” he said. “This will be much more important to the economy than the physical damage and disruptions caused by the attacks. It will take a while to sort all this out.”
The Index remains below 100, the dividing line between economic growth and contraction. A year ago in September, the Index was in positive territory at 103.5.
The UI 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 Sept. 30.
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