URBANA — For the first time in 13 months, the Illinois economy is expanding, according to the University of Illinois Flash Index.
The Flash Index reading for April is 101.5, surging above 100 for the first time since February 2020, when it was at 105.7. The COVID-19 pandemic sent the Flash Index below 100 starting in March 2020. It bottomed out at 92.8 in May of last year, and has spent the last year on a gradual increase. Any number above 100 indicates an expanding economy.
The 101.5 Flash Index reading for April was up more than three points from the March reading of 97.8. That’s the biggest monthly increase in Flash Index history, although month-to-month decreases in March and April of 2020 covered more ground.
University of Illinois economist J. Fred Giertz prepares the Flash Index for the university’s Institute of Government and Public Affairs. He says the higher reading is partly due to the formula used to determine the Flash Index through the use of monthly state income tax receipts. The formula compares the latest state tax revenues with those over the past year. For several months, that 12-month window includes several pre-pandemic months when the economy was stronger. But now, it no longer includes those better times.
All the same, says Giertz, “it’s real growth. And that’s evidenced by the fact that all the measures that are used in the Flash Index, the various tax measures, the income tax, the corporate tax and the retail sales tax are all up very strongly this last month.”
The Flash Index uses an analysis of monthly Illinois tax receipts to provide a quick snapshot of the state’s economy.
Giertz credits much of the economic recovery to federal COVID-19 stimulus programs. But he says if those benefits continue for too long, they could lead to inflation.
“That wasn’t a problem during the crisis period,” said Giertz. “But eventually, that has to stop. So we have to start moving away from some of the government support programs into having the economy in a sense take care of itself. And that’s going to be a challenge. But I think it’s something that will happen over the next several months.”
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