CHAMPAIGN, Ill. The University of Illinois Flash Economic Index rose last month to 95.4 from its 95.0 level in June.
While this is the second month in a row showing a moderate increase in state economic activity, the Flash Index is still below 100, the dividing line between growth and contraction. A year ago, the Index was at 98.3 and as recently as March was at 96.3.
There is considerable uncertainty about the direction of the economy. It is unclear, for example, whether the U.S. economy is recovering from last year's slowdown or experiencing a "double-dip" recession. Recently released national data indicate that growth slowed in the second quarter (April-June 2002) after a strong first quarter.
What's more, economic performance in 2001 was not as good as preliminary statistics had suggested. "The revised numbers show negative Gross Domestic Product growth in three quarters of last year," said J. Fred Giertz, the economist at the University of Illinois at Urbana-Champaign who released the Flash results today. "Preliminary numbers had shown only one quarter of decline."
For the first time since November, all three components of the Flash Index were up in "real" (inflation-adjusted) terms compared with a year ago. "This good news, however, is tempered by the fact that July a year ago was a very bad month for state revenues," Giertz said.
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 July 31.