The Illinois economy has been in growth mode for two months in a row, according to the University of Illinois Flash Index.
Any reading above 100 on the Flash Index means economic growth. The May reading was at 105.3. That’s up from April’s 101.5, and almost as high as the February 2020 reading of 105.7. (Find an archive of Flash Index readings here.)
University of Illinois economist Fred Giertz prepares the Flash Index for the University of Illinois Institute of Government and Public Affairs. He says the jump in the May reading largely reflects the improvement in the state’s economy since May of last year, when the Flash Index hit a low point of 92.8. He says it doesn’t mean the Illinois economy has recovered to pre-pandemic levels.
“The Flash Index is not a measure of the absolute level of the economy,” said Giertz. “It’s a measure of the momentum of the economy, growth and so on.”
The Flash Index is calculated from monthly receipts for Illinois sales and income taxes, providing a quick snapshot of the state economy. Giertz says state tax revenues have made a strong recovery from the declines suffered during the first months of the pandemic.
“So the economy itself, in terms of how much is being produced, is probably ahead of where it was 15 months ago,” said Giertz. “But unemployment is still quite a bit higher.”
Giertz notes that Illinois’ unemployment rate is currently at 7.1%. While better than the 16.4% rate of April 2020, it is still higher than pre-pandemic 4.0% reported for the state in January 2020, or the low of 3.6% reported in early 2000. (The unemployment figures are supplied by the Illinois Department of Employment Security).
Giertz attributes the slow improvement in state employment to the longer time required for the hiring process, compared to layoffs. But he also says unemployment benefits and federal stimulus funding may be causing some people to wait before reentering the workforce, which he said is “not necessarily a bad thing”.
“If you have a base income, stimulus or from unemployment, you can be a little bit more careful and maybe carry out your search for a longer period of time,” said Giertz.
While Giertz says the Flash Index is not an economic forecaster, he says the Illinois economy is likely to keep growing, at least through 2021, thanks to increased COVID-19 vaccinations and the gradual reopening of the economy.
“People didn’t have any place to spend their money during the lockdown,” said Giertz. “There’s a lot of pent up demand there as well. So everything seems to be aligning to suggest a good six months or so, the rest of this year.”
Jim Meadows is a reporter for Illinois Public Media. Follow him on Twitter: @WILLJimMeadows