Flash Index To State Economy Falls In December
A monthly snapshot of the state’s economy shows a slowdown in economic growth in December. The Flash Index fell to 105.5 in December, from its November level of 106.1. Any reading above 100 reflects economic growth. But the December reading was the lowest in 2015 --- in fact the lowest reading since March 2013.
The slower growth came in a month when holiday sales typically provide a boost. Fred Giertz, who compiles the index for the University of Illinois’ Institute of Government and Public Affairs, says the budget impasse is not helping the situation.
“Uncertainty is not a good thing for the economy, and there’s a lot of uncertainty now,” said Giertz. “Uncertainty about if and how much taxes will go up, uncertainty about whether the state will cut back on various kinds of activities.”
Giertz says that uncertainty is probably the main impact of the budget impasse on the state economy so far. He says a direct role would be limited, because while the state is collecting less in taxes, and the Flash Index is based on state tax receipts, the result leaves more money in consumer’s pockets, while at the same time state spending continues in most categories. But he says the current rate of spending with lower taxes is unsustainable.
“A lot of local jurisdiction, particularly schools and community colleges, have continued to spend and if the money that they expect to have doesn’t come through, the will start making some layoffs and cutbacks,” said Giertz.
Giertz says the longer the impasse continues, the more it could ultimately be a drag on the Illinois economy.