What Legislators Told about 2019 Economic Future

Prepared for the State of Illinois Commission on Government Forecasting and Accountability:

State of Illinois Forecast Report Summary

Illinois’ economy is having its share of ups and downs, but overall, 2018 was better than the
year before.

The state has moved beyond full employment into late-cycle expansion, which is characterized by labor supply constraints and increasing wage and cost pressures.

The first on-time state budget in more than three years is an important step toward restoring private sector confidence.

Several private sector industries are strengthening, and greater fiscal certainty and growth in tax revenues have allowed the public sector to recoup some jobs.

Income growth has accelerated to a greater degree than employment.

Accelerating wage growth, based on average hourly earnings for the state and the Employment Cost Index for Chicago, reflects the tight labor market and the improving quality of new jobs.

On a four-quarter moving average basis, Illinois’ personal income growth is now leading the regional pack.

In a turnabout from most of the past decade, downstate Illinois has outperformed upstate economies for much of the last year thanks to a revival in the pivotal manufacturing industry.

Although the economy has strengthened compared with the previous few years, Illinois still trails the rest of the country in most gauges of economic performance.

Employment is increasing more slowly than the Midwest and U.S. averages, the labor force is near its lowest point in more than 10 years, and weaker consumer demand than in other states is weighing on population-dependent industries such as retail, leisure/hospitality and real estate.

Progress in the housing market has slowed; single-family house price appreciation is about half the regional and national rates, and builders are putting up fewer units than a year earlier.

Illinois will sustain some of its recent momentum in the near term while remaining a national laggard.

The pace of employment and income growth will peak and the unemployment rate will drop to a new low by late 2019.

Moderating job gains in the rest of the region over the coming quarters will narrow the gap between the Midwest and Illinois growth rates.

The expansion will wind down nationwide in 2020 as higher interest rates, the diminished impact of fiscal stimulus, and deficits begin to take their toll.

To be a solid performer longer term, Illinois must navigate its fiscal challenges without doing lasting damage to its business climate.

The state’s demographics present it with another challenge, as an aging population coupled with a trend toward fewer workers hampers job and income gains, which are forecast to be below average
over the extended forecast horizon.


What Legislators Told about 2019 Economic Future — 2 Comments

  1. It sucks to be in Illinois! The state has been ruined by stupid economic policy, unfriendly business atmosphere and crazy social policy’s. It’s easy to see in comparison to the states around us.

  2. The ONLY reason 2018 was marginally better than 2017 was due to
    Trump’s economics.
    Does that “trigger” you, Joey Blowhard ?
    What about you, Little Tommy Snowflake ?

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