Recession’s grip on the Illinois economy tightened in January as the UI Flash Index fell to a reading of 97, the lowest recorded since October 2003. The index fell from its December level of 98.7 and is down from a reading of 103.6 just one year ago.
“If there were ever any doubts, the January index shows that the state’s economy is clearly in recession like the rest of the country,” said economist J. Fred Giertz, who compiles the index for the Institute of Government and Public Affairs. “The decline has been steep in recent months. There are no signs that the decline is at an end.”
The reading marks the second consecutive month the index has been below 100, which is the dividing line between economic contraction and economic growth.
“The decline in the Illinois economy is part of the worldwide economic slowdown and has little to do with particular features of the state’s economy or state government,” Giertz said. “However, the implications of the recession for the state budget are extremely severe.”
There are no bright spots in the state’s revenue picture, Giertz said. Receipts from personal income tax, corporate taxes and sales taxes all were down in real terms from the same month a year ago.
The Flash Index was below 100 in December for the first time since March 2004 as the state’s economy emerged from the recession of 2001. During that downturn, the index spent 35 consecutive months in sub-100 territory.
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 Jan. 31, 2009.