The Illinois economy has grown more slowly, or contracted more sharply, than the U.S. economy as a whole every year for at least the past 12 years; new data released for 2010 show that the trend continued last year. The U.S. economy grew by 2.55% in 2010, while Illinois posted just a 1.90% increase. Illinois is the nation’s fourth-biggest state economy, after California, Texas, New York, and Florida.
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The slower growth in the state may be a result of several conditions:
- Illinois’ slower population growth than other states, particularly in the faster-growing southwest
- The state’s continued struggles with legacy manufacturing
- The state’s relatively high rate of taxation compared with neighboring states
- A recent report from the American Legislative Exchange Council ranked Illinois 47th in growth potential based on policy variables like tax, workers compensation, legal systems, and and minimum wage. It found Illinois ranked 48th in its backward-looking index based on objective measures such as employment growth, migration, and per capita income.
Complete data for GDP by industry are not yet available, but some initial data points are included:
- The state’s mining, construction, and agriculture industries declined 15%, 9%, and 3%, respectively, from the prior year
- However, health care, finance & insurance, and wholesale trade–all big parts of the state economy–posted gains of 2.4%, 1.5%, and 3.3% respectively.
Note that GDP is often cited on a quarterly basis and a traditional definition of a recession is two consecutive quarters of negative growth. GDP by State is reported only on an annual basis. Though we had a recession in 2001 and 2002, it did not result in negative growth for any given year.
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Illinois lagged its neighbors in GDP growth last year. Among Midwestern states, Indiana grew fastest with 4.6% annual growth, while only Missouri, at 1.4%, grew more slowly than Illinois.
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