U of I Flash Index hits post-crisis high
Friday, Apr 1, 2022 - Posted by Rich Miller
* From the University of Illinois’ Institute of Government and Public Affairs…
The March University of Illinois Flash Index moved ahead strongly in March, rising to 106.1 compared to 105.7 in February.
“This is a post-crisis high,” said University of Illinois economist J. Fred Giertz, who compiles the monthly index for the Institute of Government and Public Affairs. “The Illinois economy gained strength as measured by state tax receipts for the month, overcoming the economic headwinds of the invasion of Ukraine and the most recent variant of the COVID-19 virus.”
As noted in recent reports, state tax revenues have been extremely strong as has been the case for other states and the federal government. “This raises concerns about the stability of the ratio of tax receipts and economic activity that is the fundamental building block of the index,” said Giertz. “These issues should be resolved once the disruptions of the COVID-19 crisis recede.”
Illinois unemployment data provide support for the strength of the index. The unemployment rate in Illinois fell to 4.8%, which is also a post-recession low, from 5.0% the previous month and 6.9% a year ago.
Many observers have expected the economy to slow somewhat in 2022, but this has yet to materialize. Even after adjusting for the recent high rate of inflation, all three components of the index were up from the same month last year, with corporate and individual tax receipts especially strong. See The Full Flash Index Archive. The recently released national GDP growth rate for the last quarter of 2021 was also strong at an inflation-adjusted 7.0%.
The Flash Index is the weighted average of Illinois growth rates in corporate earnings, consumer spending and personal income as estimated from receipts for corporate income, individual income, and retail sales taxes. These 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 March 31, 2022. After two years since the beginning of the COVID-19 crisis, ad hoc adjustments are still needed because of the timing of the tax receipts resulting from state and Federal changes in payment dates.
- Three Blind Mice - Friday, Apr 1, 22 @ 10:05 am:
I am sure Ken Griffin is thrilled with this latest economic news.
Have the business reporters called Ken and the Illinois Chamber of Commerce for comment?
- Oswego Willy - Friday, Apr 1, 22 @ 10:17 am:
“But, but… it’s bad”
How can one decide that being negative to good things is a power move?
Short-sided politics.
- Chicago Blue - Friday, Apr 1, 22 @ 10:26 am:
It’s amazing how effective the right-wing spin machine is at a local & national level. Massive economic growth and record jobs # are going to see the Dems lose the House & the Senate and maybe the governorship here. (Yes, inflation is high, but so are corporate profits driving a chunk of that.)
- Give Us Barabbas - Friday, Apr 1, 22 @ 10:28 am:
Pent-up post-covid demand driving the numbers, would be my guess.
- H-W - Friday, Apr 1, 22 @ 10:36 am:
I have to think the concept of “economies of scale” are also relevant for explaining our slower growth relative to other states, and our prolonged, strong growth beyond expectations.
Good news is always good news.
- Homebody - Friday, Apr 1, 22 @ 10:40 am:
I always see this flash index referenced, but I’ve never found a concise explainer of what it is, and how a lay person should generally interpret it. Does anyone have a recommended primer?
- Thomas Paine - Friday, Apr 1, 22 @ 10:41 am:
=== “This raises concerns about the stability of the ratio of tax receipts and economic activity that is the fundamental building block of the index…These issues should be resolved once the disruptions of the COVID-19 crisis recede.”===
Translation: “Illinois places a sales tax on stuff and not services, and during the pandemic people stopped spending money on services like personal fitness trainers and instead purchased home gym equipment. As the pandemic subsides, we should tax services more and tax stuff less to maintain a strong economic state.”
Sound about right, Fred?
- PublicServant - Friday, Apr 1, 22 @ 12:33 pm:
But corruption, Madigan, and CRT… /s
- walker - Friday, Apr 1, 22 @ 1:32 pm:
Supply-side economics, as touted by GOPers, has mostly failed us for 40 years. Now we are watching demand-side economics mostly work for our country. If only we would learn from experience
- scorekeeper - Saturday, Apr 2, 22 @ 9:38 pm:
@homebody
===I always see this flash index referenced, but I’ve never found a concise explainer of what it is, and how a lay person should generally interpret it. Does anyone have a recommended primer?===
Since Google doesn’t seem to be working for you:
“…the Flash Index is compiled on the first business day of each month using data from … the Illinois Department of Revenue [to] provide estimates of economic activity in the state. Individual income tax receipts reflect personal income; corporate receipts are a surrogate for business profits; and sales tax receipts measure retail sales. […] The index is constructed with the reading of 100 the dividing line between expansion and contraction.”