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* From the U of I’s Institute of Government & Public Affairs…
The University of Illinois Flash Index fell to 104.7 in July from its 105.0 level in June. This indicates that the state’s rate of economic growth is slowing. The slow-down aligns with concern about the national economy.
National gross domestic product (GDP) growth for the first two quarters of this year was weak (0.8 percent and 1.2 percent, respectively). “Recent data on the national GDP confirms that the recovery from the 2007-2009 recession has been the most anemic since World War II,” said J. Fred Giertz, who compiles the index for the Institute of Government and Public Affairs.
The last few years have marked a reversal of a trend established in the early years of the recovery. GDP growth had little impact on the rate of unemployment, which remained stubbornly high. More recently, the national unemployment rate has fallen and remained low even with slow overall growth.
The Illinois unemployment rate fell from 6.4 percent to 6.2 percent in July, while the national rate rose slightly to 4.9 percent. This narrows a long-standing gap between the state and national rates.
Individual income tax and corporate tax receipts were down for the month while sales tax revenue was up from the same month last year after adjusting for inflation.
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, 2016.
* WILL…
“We’ve been in a recovery now for almost seven years”, said [Fred Giertz, the Index’ compiler]. “And recoveries don’t last forever. So it may be slowing down, it’s kind of a natural maturation of the growth cycle. So a lot of things are happening and again, there’s no easy fix on these. We’d all like to have strong growth, but obviously, if that could be done easily, we would have done it already.”
The index is down from its most recent high of 107.2 in January of 2014 and 107.1 in April of 2015.
* More on how it’s calculated…
The reported index is based on 12 months of data with a new month added and one dropped each month. The index is constructed with the reading of 100 the dividing line between expansion and contraction. Consequently, the key focus of the index is not whether it is increasing or decreasing, but whether and how much it is above or below the 100 level.
posted by Rich Miller
Tuesday, Aug 2, 16 @ 1:17 pm
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We pulled about $2 billion out of the state economy last year. That can’t be helping matters much. But at least this fits the Governor’s gloom and doom narrative.
Comment by 47th Ward Tuesday, Aug 2, 16 @ 1:35 pm
Layoffs and cutbacks at the state universities, community colleges, and social services vendors also slow their local economies.
Comment by DuPage Tuesday, Aug 2, 16 @ 2:08 pm
The state will continue to fail until our legislators start focusing on policies that promote economic growth.
Comment by jim Tuesday, Aug 2, 16 @ 2:20 pm
so our greatest economic growth occured with the inc tax at a higher rate. when the higher rate went away; and the State reduced spending and paying bills, growth started dropping.
So pre Rauner growth good, post Rauner growth on steady decline.
Comment by Ghost Tuesday, Aug 2, 16 @ 4:20 pm
Because… MADIGAN!!
Comment by Anon2U Tuesday, Aug 2, 16 @ 4:29 pm
International events could knock the US into a recession. That could really hammer state revenues.
The real killer in state expenditures is if we have been losing federal funds because we are not providing the state match.
The uncertainty about future tax levels and structure cannot be helping our growth. I would be steering investments into more stable states.
Comment by Last Bull Moose Tuesday, Aug 2, 16 @ 4:40 pm
Illinois has the third highest state and local tax burden in the nation. One of the worst unemployment rates and one of the worst job growth rates. We are losing population faster than all states but West Virginia. I’m sure higher taxes will make everything better.
Comment by Ron Tuesday, Aug 2, 16 @ 5:43 pm
Let’s not focus on the State budget as a proxy for the State economy, folks. It’s about 5% of Illinois GSP, which is nothing to sneeze at, but it’s also not moving the proverbial needle that much either.
Comment by Arthur Andersen Tuesday, Aug 2, 16 @ 5:43 pm