Index to State Economy Takes Dip
The University of Illinois' Flash Index went up a full point in September, only to drop back down by half a point in October. But economist Fred Giertz says the new reading of 98.3 isn't all bad news --- because the index to the state economy is still higher than it has been all summer.
"Last month's increase was probably a little bit overly optimistic, but it didn't fall back down to the old level," Giertz said. "So over the two-month period, it shows a very modest gain, which is good news, compared to what many people were fearing, which was a double dip recession back a month or two ago."
A hundred is the dividing line between economic growth and contraction in the Flash Index. And it is now a full three years since the Index last showed growth in the Illinois economy. The Index hit a low point of 90.0 in Sept. 2009, and there have been fears that levels might fall again, indicating a double-dip recession. But Giertz said the overall improvement in the Flash Index, along with other indicators, make a double-dip recession more and more unlikely.
"These things are always a question of what the probabilities are," Giertz said. "But some people were talking about a one in three or one in four chance of a double-dip, maybe six weeks ago. Now that probably is down to one in ten. But that one in ten is still there. So it's always a chance that might happen, but less likely than it was before."
Giertz said modest improvements in the national economy also argue against a double-dip recession.
The Flash Index is based on analysis of Illinois tax receipts --- and Giertz said only sales tax receipts showed any real improvement last month.