Flash index rise doesn't change slow trend
URBANA — The University of Illinois flash index rose sharply in April, but the economist who compiles it warns the latest reading doesn't change the trend of very slow recovery from recession.
The index — a barometer of the Illinois economy — moved from 104.7 in March to 105.8 in April. That was the highest reading since August 2007.
But J. Fred Giertz, who compiles the index for the UI's Institute of Government and Public Affairs, said the sharp increase can be explained by unusually large final payments for 2012 tax returns.
The index is based on individual income tax receipts, corporate income tax receipts and sales tax receipts.
Individual and corporate income tax receipts were both up strongly in April, compared with April 2012, while sales tax receipts were down by a small amount.
Last year, many taxpayers received higher-than-expected income — for example, through capital gains or bonuses.
So when taxes were filed this April, those taxpayers found that withholding and estimated payments failed to match their actual tax liability.
That meant they made unusually large final payments when 2012 tax returns were filed.
"The April result does not necessarily reflect a surge in the Illinois economy," Giertz said in a release from the institute. "Instead, it represents a kind of catch-up of growth that occurred over 2012."
Giertz said the national economy grew at a 2.5 percent rate in the first quarter of 2013.
"This is a positive sign compared to the sluggish results for the last quarter of 2012," he said. "However, this growth was not sufficient enough to affect unemployment — especially in Illinois where it is 9.5 percent, almost 2 percentage points above the national rate."
The flash index is a weighted average of Illinois growth rates in corporate earnings, consumer spending and personal income, as measured by tax receipts.