Although the structure of the Illinois economy often mirrors or parallels the economy of the nation, Illinois often experiences the business cycle a little out of phase with the rest of the country. Nevertheless, rising oil prices, the sub-prime mortgage rate crisis, and rising unemployment rates all create uncertainty for both the nation and the economy of the state of Illinois.
Employment in Illinois – 2006 and 2007
Illinois added an impressive 64,900 jobs in 2006, more than the 61,300 in 2005. Moreover, this was more than the 55,800 jobs that were added in the Rest of the Midwest (Iowa, Wisconsin, Indiana, Michigan, Ohio and Missouri). Nevertheless, Illinois lags behind the country and the RMW in overall job formation, closing the gap in 2006 with RMW, but seeing it increase in comparison to the nation. The 2007 monthly average for job formation was down from 2006, from 5,342 jobs last year to 4,189 in 2007.
Patterns of Economic Growth in Illinois
From September 2006 to September 2007, patterns of growth within the state of Illinois differed. The non-metropolitan areas lost jobs, while metropolitan areas have shown impressive growth that exceeds the RMW. Seven of the ten major metropolitan areas in Illinois have shown more growth than others; Champaign-Urbana and Davenport-Rock Island-Moline both declined, while Kankakee remained the same.
Prospects for Recovery in Unemployment
Illinois’ employment peak came in November 2000, and it has not since been able to recover back to this point. Though Illinois continues to create jobs, an increasing population and labor force mean that to return to this peak at current levels would require 18 more months (72,000 jobs) of growth. Current estimates are that Illinois will create between 30,000 and 40,000 jobs in the coming year, but the forces affecting these estimates are hard to determine.
Affects of the Sub-Prime Mortgage Crisis
The sub-prime mortgage crisis will exact a ripple effect on the economy, and since much of Illinois trade is with RMW, the lagging economy of the area might exact a negative toll on Illinois’ economy. The falling cost of the dollar may help in this regard, as Illinois international exports have increased from $26.1 billion in 2003 to $42.1 billion in 2006. Similarly, Illinois’ total share of exports has increased from 3.7 to 4.1 percent in the same time. Illinois’ share of GDP, however, fell from 4.7 to 4.5 percent (30 years ago, this was 6 percent).
Illinois’ Gross Product
Illinois’ gross product grew just below the US’s rate of 3.4 percent at 3 percent. This is significantly above the RMW’s rate of 1.2, though Michigan’s decline in this area is responsible for the RMW’s poor numbers. In income, Illinois grew 5.9 percent, RMW grew 4.5 percent, and the U.S. grew 6.6 percent. Illinois’ per capita income of $38,297 was well above the U.S. figure of $36,629, but Illinois’ gap has narrowed in this regard from 9 percent to 4.5 percent in the last decade. This is due in particular to the fact that Illinois has lost significant amounts of middle income manufacturing jobs (6 percent higher rate than outside of Illinois).
Overall Prospects for the Illinois Economy
Illinois continues to underperform in the period of recovery from the 2000 downturn, and it does not seem that this year will be a significant improvement in this trend. The contentious political environment due to fiscal problems in the state continues to be fueled by demands for funding for infrastructure, education, pensions, and health care. Nevertheless, Illinois’ position as a major player in the Midwest economy puts it in a position to strategically take advantage of markets and resources in the region.
