URBANA, Ill.—The U. of I. Flash Index fell to 105.5 in December from its 106.1 level in November. This is not only the lowest reading all year, but the lowest reading since March 2013. (See full archive.) The Illinois economy is still growing, as indicated by the index being at above 100, the dividing line between growth and decline. However, this reading suggests that the state's economy slowed considerably in the last part of 2015.
Coming off a year of relatively steady growth in 2014, the index began 2015 in the high 106-low 107 range, and then hovered steadily around 106.5 all summer. In the fall and winter, the index dipped, indicating a slowdown. “This suggests that the long, slow recovery from the 2007-09 recession continues to be disappointing,” said U. of I. economist J. Fred Giertz, who compiles the index for the Institute of Government and Public Affairs.
Another possible factor contributing to the slowdown: the political stalemate over the budget. “While the decline of the index this month cannot be definitively attributed to the state’s ongoing budget stalemate, it is likely that it is beginning to have an impact,” Giertz said.
State unemployment ticked upward by 0.3 percentage points to 5.7 percent, falling further behind the national 5.0 percent rate. Nevertheless, the Illinois unemployment rate is still below the 6.2 percent rate of a year ago. National gross domestic product grew at a modest 2 percent rate during the third quarter.
After adjustments for the new individual and corporate tax rates, corporate and sales tax receipts were down moderately while individual income tax revenues were up in real terms from the same month last year. The slight decline in real sales tax revenues suggests modest holiday sales.
The U. of I. 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 was then calculated for the 12-month period using data through Dec. 31.