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* Press release…
For the first time in its quarter-century history, the University of Illinois Flash Index will not be published for March because the COVID-19 pandemic has compromised the components of the index. The index, which stood at 105.7 in February, is derived using receipts from the state’s sales tax, personal income tax and corporate income tax.
“The sudden, unprecedented near-shutdown of economic activity from the coronavirus is clearly causing huge, but as yet unmeasured, economic damage,” said economist J. Fred Giertz of the U of I System’s Institute of Government and Public Affairs, who has compiled the monthly Flash Index since 1997.
“The shutdowns and the stay-at-home orders clearly have had an immediate impact on economic activity that would show up in declining state tax receipts,” said Giertz. “However, the state’s response in granting deferrals in tax payments will further depress revenues for March.”
Due to the unexpected closures of businesses caused by the pandemic, the state provided extra time to pay sales taxes, and has conformed to federal changes that moved the personal and corporate income tax filing deadlines to July 15.
The value of the Flash Index has been the availability of nearly contemporaneous information about the economy from tax receipts, but the pandemic turned this advantage into a liability for the index, Giertz said. Adjustments have been made for ad hoc problems that have arisen in the past, but they were much more minor, affecting only one of the three kinds of tax receipts, he said.
“The saying ‘It’s different this time’ is almost always wrong. But this time, it’s accurate,” Giertz said. “The economic effects of the suddenness and severity of the current crisis are unprecedented and will take some time to understand fully.”
Wild times.
That most recent Flash Index of 105.7 was the ninth highest February rating since 1984 and the highest month since the beginning of 2017.
posted by Rich Miller
Wednesday, Apr 1, 20 @ 9:53 am
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March sales tax collections mostly reflect February retail activity. April collections will see the impact of March closures and social distancing.
Comment by Cyclotron Wednesday, Apr 1, 20 @ 10:23 am