The year 2010 promises to bring slow recovery to Illinois and the nation. By most estimates, the recession ended in the last half of 2009 and growth will continue this year. However, many of the problems of the recession remain, most notably in high rates of unemployment.

By the beginning of 2009 there was no doubt the nation was in the grips of a recession. Furthermore, the financial panic of late 2008 brought a precipitous decline in economic activity. Early policy focused on relieving this panic; the bailout took top priority and brought emergency aid where systemic risk threatened an economic meltdown. Recently some in both parties have challenged the bailout, but it seems to have been successful.

In mid 2009 the focus shifted to the stimulus package, a nearly $1 trillion program meant to address the broader effects of the recession. The success of the plan is still in question. There are some who dismiss it as futile or even counterproductive and many more who support stimulus in theory but take issue with this implementation. The majority of the funds are yet to be spent, in any case. The President has focused on health care reform and global warming (through a cap-and-trade plan) while the country remains engaged militarily in Iraq and Afghanistan. These reforms, with their huge and uncertain impact on the plans of businesses and investors, may reinforce a general lack of confidence in the economy.

2010 promises continued high rates of unemployment, a fact that is leading some to argue for another stimulus package focusing on job creation. However, high unemployment rates, at this stage of a recovery, are normal. Such a program’s benefits must be weighed with the problem of increasing an already large deficit. Even with such a program, the pace of the recovery is likely to be slow—for many, painfully slow.

Illinois has not been at the center of the recession, but has certainly felt its effects with unemployment rates rising significantly to 11 percent. The Flash Index, IGPA’s barometer of the state’s economic activity, confirms there is trouble. It fell to 90 in September, the lowest level since the recessions of the early 1980s. The recovery in Illinois will be slow and compounded by the additional burden of fiscal problems that have not been addressed since the aftermath of the 2001 recession. These lingering issues must be addressed as a part of any effective recovery.