The U of I Flash Index fell to 105.8 in October from its 106.0 level in September. This is the third month of decline for the index and its lowest level since April 2013.
This pattern of decline in the index does not mean that the Illinois economy is declining. The index remains above 100—the dividing line between economic expansion and contraction. “The recent declines indicate that the Illinois economy continues to grow, but at a slower rate,” said J. Fred Giertz, who compiles the index for the University of Illinois Institute of Government and Public Affairs.
This is consistent with a relative slow rate of growth for the national economy that grew at only 1.5 percent in the third quarter after a stronger 3.5 percent reading for the second quarter.
Despite the lower reading, the state unemployment rate continued to decline, falling to 5.4 percent, a post-recession low and only slightly above the national level of 5.1 percent. This is encouraging since the unemployment rate remained stubbornly high during the early years of the recovery from the 2007-2009 recession.
“Both the U.S. and Illinois economies continue to face a number of challenges and uncertainties,” Giertz said. “These include a slowing world economy and the state’s continuing budget impasse.”
After adjustments for the new individual and corporate tax rates that fell in January, corporate tax receipts were higher, individual income receipts were down and sales tax revenues were virtually unchanged in real terms from the same month 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 October 31, 2015.
