NEWS INDEX 2000 November

Flash Index of Economic Growth indicates gradual slowing

J. Fred Giertz, Institute of Government and Public Affairs
(217) 244-4822

Mark Reutter, Business Editor
(217) 333-0568; mreutter@uiuc.edu

11/2/02

EDITORS, NEWS DIRECTORS: The Flash Index of Economic Growth, produced by economists at the University of Illinois, is based on the most up-to-date information on the state economy.

CHAMPAIGN, Ill. -- The University of Illinois Flash Economic Index fell in October to 102.8 from its 103.5 reading in September, suggesting that despite some ups and downs, the state is experiencing a gradual slowing of economic growth.

All three components of the Index -- individual income, corporate income and sales taxes -- had a lower growth rate last month than for the same month a year ago. Corporate receipts saw the biggest decline, reversing their strong performance in September.

"The results in Illinois are similar to recent national trends indicating reduced rates of economic expansion," said J. Fred Giertz, a UI economist who released the Flash reading today (Nov. 2).

"But as noted many times, a slowing economy is not necessarily bad news for the state or nation. A Ôsoft landingÕ has been the goal of Federal Reserve policy for some time. The key is to slow the rate of growth without creating a downturn or recession. So far, the results seem encouraging."

The Flash Index is a weighted average of growth rates in sales-tax receipts, individual income-tax receipts and corporate-earning receipts in Illinois. The receipts are adjusted for inflation before growth rates are calculated. The growth rate for each component is then calculated for the 12-month period using data through Oct. 31. Any reading above 100 means the state economy is expanding, while any number below 100 indicates the economy is shrinking.