Overview of the Economic and Fiscal Situation in Illinois

Abstract

Despite enormous recent challenges, Illinois’ economy remains relatively healthy compared to other states. Median family income in Illinois has remained above the national average since at least 1984. After a relatively prosperous period in the late 1990s when median family income in Illinois exceeded the national average by more than $7,000, the most recent data indicate that Illinois is now only about $700 above the national average. While Illinois has been shrinking as a share of the nation’s population—from 4.8 percent in 1984 to 4.1 percent in 2012—Illinois’ recent economic slide may or may not be a precursor to long-term economic decline. In recent recessions, Illinois has a pattern of doing worse than the national average and has stumbled to slow recoveries. Nonetheless, following the recessions that ended in March 1991 and November 2001, Illinois eventually regained firm economic footing. Unfortunately, the recession that began in December 2007 and ended in June 2009 has hit both the nation and Illinois exceptionally hard, and Illinois’ recovery has lagged the nation’s recovery in profound and disturbing ways. Figure 2 (on page 2) shows that Illinois’ unemployment rate—a major indicator of economic distress—soared far above the national average following this recession and has remained disturbingly high. It is far above the national average more than three years after the recession ended. The unemployment rate in Illinois is now (November 2013) about the same as in Michigan (which has suffered severe disruption due to the decline of the auto industry). Both Illinois and Michigan are much higher than our neighboring states of Indiana and Wisconsin.

Keywords: Illinois, fiscal, economic, pension, recovery, budget, painful, increase programs, challenges