URBANA – The Illinois economy continued its slow recovery in January, according to the University of Illinois Flash Index.
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The Flash Index measured the state’s economy at 96.3 for the first month of 2021. That’s up from 95.9 the month before. Any Flash Index reading below 100 indicates economic contraction. And according to the Flash, Illinois’ economy has been in contraction since March 2020, when the state was first hit by the COVID-19 pandemic. The Flash Index dropped from 105.7 in February 2020, to 99.8 in March, and bottomed out at 92.8 in May. Since then, its has shown a gradually recovering economy. (See a listing of Flash Index readings dating back to its inception at this link.)
University of Illinois economist Fred Giertz compiles the Flash Index for the university’s Institute of Government and Public Affairs, based on state tax revenues. He says the Flash Index is reflecting relatively strong tax revenues, even while other indicators have been less promising.
“It was kind of conflicting signs this month,” said Giertz. “The unemployment rate in Illinois, the most recent unemployment rate was up somewhat, which is negative. But then the revenues generated by the various state taxes were pretty strong. Again, just a modest increase.”
All in all, Giertz says the state’s tax revenues have not been as badly hit by the pandemic as first feared.
“Even though the revenues were affected by the crisis, it wasn’t nearly as severe as we thought six months ago or so,” said Giertz. “So the state revenues held up surprisingly well during this situation.”
While the Flash Index doesn’t make predictions, Giertz says he thinks the Illinois economy will improve this year, as more people are allowed in restaurants and other businesses, and more people are vaccinated against the coronavirus.