Beware the naysayers who allege that Illinois’ economy is “upside down” and “struggling.”
Midway through 2023, there is no evidence that the state is in recession.
Let’s look at the facts.
The U.S. Department of Commerce reports that Illinois’ economy expanded again in the first three months of this year, with the state now producing $1.07 trillion annually. Only four states add more value.
The University of Illinois Flash Index — which tracks corporate earnings, consumer spending and personal income — has shown growth for 27 consecutive months.
In the last 12 months, our nonfarm payroll employment growth surpassed neighboring Wisconsin, Iowa, and Missouri. In fact, Illinois added as many jobs over the last year as those three states combined. And nonfarm payroll employment increased in all 14 of the state’s metro areas, from Chicago to Carbondale.
Private industry employment also recently hit a record high. The U.S. Bureau of Labor Statistics reports that, since April, 5.32 million workers have been employed in our private sector, topping pre-pandemic levels.
And while our unemployment rate was slightly above the national average, we continue to have about 400,000 available jobs posted every month. That’s 1.5 job openings per unemployed person.
That’s due to a tight labor market. The unemployment rate in the Chicago-Naperville-Arlington Heights area most recently came in at 3.2%, which was “a record low unemployment rate for the month of May.”
Economist Arthur Okun coined a concept called the “Misery Index” in the 1970s to measure economic distress. The misery index is simply the unemployment rate plus the inflation rate.
In May, unemployment was 3.2% and inflation was 3.3% in the Chicago area, resulting in a misery index of 6.5%. That same month in Tampa, unemployment was lower at 2.7% but inflation was significantly elevated at 7.3% — a misery index of 10.0%. Nationally, the index was 7.8%.
This is not to say that the Chicago area is thriving compared to a place like Tampa or that Illinois is better off than the nation.
But these facts provide context and perspective for those peddling the false narrative that Illinois is somehow declining — as if a steady stream of “Now Hiring” signs and construction sites buzzing with activity across our state weren’t evidence enough.
Ultimately, it’s clear that workers fare better and many businesses enjoy competitive advantages by locating in Illinois.
The policy imperative is to make that true for more people and businesses across the country — and to build on the positive momentum we’ve already created to further strengthen Illinois’ economy.
The good news is that the state is taking these steps.
For example, last month Illinois was awarded $1 billion in federal funding for high-speed internet infrastructure. This was only possible because our historic Rebuild Illinois capital program put us in a better position than our peers to win federal grants.
Research from the Illinois Economic Policy Institute and the University of Illinois has documented how a $1 billion investment connects more than 200,000 homes and businesses to broadband internet and boosts output by $2.6 billion, with the largest impacts in under-resourced, exurban and rural communities.
Similarly, Illinois is positioned well to take advantage of federal renewable energy credits thanks to our Climate and Equitable Jobs Act (CEJA), passed in 2021. Nationally, Illinois had the fifth-largest increase in wind and solar power generation last year.
But additional steps can be taken. As examples, creating a refundable Child Tax Credit and finding ways to make child care more affordable would not only strengthen families but also boost labor force participation and reduce employee turnover for Illinois’ businesses.
While all business cycles have their booms and busts, Illinois’ expansion hasn’t yet come to an end. With sound public policies, we can keep it going — and keep proving the naysayers wrong.
• Frank Manzo IV, MPP is an economist at the nonpartisan Illinois Economic Policy Institute.
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