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IGPA: Illinois growth rate slows as tax revenues return “to a more normal pattern”

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Illinois

* Institute of Government and Public Affairs…

The University of Illinois Flash Index for July declined significantly, falling to 104.9 from its 105.5 reading in June.

“The contradictory economic indicators continue with negative growth in the U. S. GDP the last two quarters (based on preliminary estimates) and slowing growth of Illinois tax receipts accompanied by still low unemployment rates both nationally and in the state with a high level of inflation,” said University of Illinois economist J. Fred Giertz, who compiles the monthly index for the Institute of Government and Public Affairs. “It should be noted that a slowing index does not mean the Illinois economy is in decline since a reading above 100 indicates growth.”

Giertz indicates that this situation has been characterized as a supply-induced slowdown as compared to the usual one resulting from deficient demand. This is explained by the Federal Reserve’s imposition of tighter monetary policy to address inflation concerns along with waning federal stimulus activity and continued supply chain issues exacerbated by the war in Ukraine.

“Illinois tax revenues are returning to a more normal pattern after more than two years of unexpectedly robust growth during the recovery from the Covid crisis. Individual income tax and sales tax receipts have not kept pace with inflation over the last three months while corporate tax receipts remain strong.”

The question at hand is whether the economy is in a recession. A recession is traditionally determined after the fact by the National Bureau of Economic Research, a respected private research group. While recessions are often defined as two-quarters of negative growth, the actual recession call is a more complex decision, especially in the current environment with both slowing growth and low unemployment. Clearly, the risk of a recession has increased, but it is too early to label this a recession. See the full Flash Index archive.

The Flash Index is a 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 revenues 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, 2022. After more than 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.

posted by Rich Miller
Monday, Aug 1, 22 @ 2:47 pm

Comments

The Older JB Government cheese is drying up

Comment by Disappointed Suburban Female Monday, Aug 1, 22 @ 2:58 pm
People trying to justify that we are not in a recession is a perfect example of political misinformation.

It has become the modern litmus test for people who deny reality(also known as the extreme left)

Comment by The Dude Monday, Aug 1, 22 @ 3:29 pm
=== It has become the modern litmus test for people who deny reality(also known as the extreme left).===

How many recessions do you remember that hit the 50 year record for low unemployment rates?

Comment by Da big bad wolf Monday, Aug 1, 22 @ 3:40 pm
=It has become the modern litmus test for people who deny reality(also known as the extreme left)=

Right, because the extreme right is just perfectly grounded in reality./s

That you JFK Jr.?

Comment by JS Mill Monday, Aug 1, 22 @ 3:40 pm
@The Dude -

Fred Giertz is the GOP’s favorite economist. The idea he is contorting the picture to benefit Biden and Democrats is laughable.

The truth is that a lot of economists are stumped by the complexity of what is going on. We have rising wages, high demand for labor, energy; consumer spending has shifted dramatically. A major war in Asia. And oh yeah, a million Americans just died of COVID unexpectedly, transferring as much as $1 trillion in wealth to their children and grandchildren and really throwing of actuarial tables and Health spending projections.

It’s not a Recession until Americans stop spending money and unemployment rises. People might have stockpiled so much cash in the pandemic they don’t need to work in order to spend right now.

Comment by Thomas Paine Monday, Aug 1, 22 @ 3:46 pm
“People trying to justify that we are not in a recession is a perfect example of political misinformation.”

No, it’s really not. It’s an important question. I’m almost sixty years old and have lived through a lot of recessions. None of them see simultaneous creation of hundreds of thousands of jobs, 2 to 1 job openings vs. applications and continued inability to hire staff. That’s not denying reality. It’s trying to understand reality.

I know recessions. This doesn’t remotely feel like a recession.

Comment by New Day Monday, Aug 1, 22 @ 3:49 pm
Da big bad wolf

While unemployment low there is an argument that underemployment is at an all time high.

And I would argue based on historical data that the corporate layoffs often come between the 2nd and 3rd quarter of the lack of GDP growth. Didn’t Amazon lay off 100,000 today?

Comment by The Dude Monday, Aug 1, 22 @ 4:06 pm
=== there is an argument that underemployment is at an all time high.===
Show us those numbers.

Comment by Da big bad wolf Monday, Aug 1, 22 @ 4:44 pm
=== Didn’t Amazon lay off 100,000 today?===
How much is that divided by 133.63 million (full-time employees in the United States.)

Comment by Da big bad wolf Monday, Aug 1, 22 @ 4:53 pm
~~ Didn’t Amazon lay off 100,000 today?

Nope.

“(AMZN) finished the quarter with 1,523,000 full-time and part-time employees, not including contractors or temps. That is down from 1,622,000 at the end of March, but still up 14% from a year ago.”

So they DO have 100k less employees than at the end of March. But simultaneously having 14% more employees than a year ago doesn’t seem like they’re panicking

Comment by jimbo Monday, Aug 1, 22 @ 5:41 pm
“It has become the modern litmus test for people who deny reality(also known as the deniers of that trump lost the free and fair 2020 election)”

Comment by Huh? Monday, Aug 1, 22 @ 6:04 pm
=the lack of GDP growth=

Slowing growth is not a lack of growth. Math isn’t your friend.

Comment by JS Mill Monday, Aug 1, 22 @ 6:05 pm