UI economic index gives some good news
URBANA – The University of Illinois flash economic index halted its yearlong slide in June, signaling at least a brief pause in the increasingly slow-growing Illinois economy.
The index stood at 102.3 in June, the same as in May, after falling from 106.8 a year ago when the state economy was growing rapidly.
The flash index is a weighted average of Illinois growth rates in corporate earnings, consumer spending and personal income. The higher the index is above the 100 mark, the faster the economy is growing. The lower the index is below the 100 mark, the slower the economy is growing.
"It is unlikely that the U.S. economy is currently in a recession," said UI economist J. Fred Giertz, who compiles the flash index for the Institute of Government and Public Affairs.
"The economy grew during the first quarter of 2008 at a slow 1 percent rate. Most observers believe the just-ended second quarter will be much the same. This is clearly a major slowdown, but not a recession," Giertz stated in a UI news release.
Giertz said he sees "considerable downside risk" of a recession.
"If problems such as instability in the financial markets or high fuel prices become more severe, this could tip the balance," he said.
Illinois is growing more rapidly than the national economy, Giertz added. The state has avoided some of the housing market and subprime lending problems that have plagued states such as Florida, California and Arizona, and the auto industry woes that have befallen Michigan and Ohio, he said.
"Illinois has not totally avoided these problems, but the impact has been less severe here," Giertz said.
The state has also benefited from the weak dollar, which has stimulated certain export industries, he said.
"The heavy spring rains and flooding have created localized disasters, but the overall impact on the state's economy should be small," he said.
All three components of the flash index – individual income tax, corporate tax and sales tax receipts – were up modestly from a year ago, when adjusted for inflation.