Economic Growth – CGFA Survey on the Illinois Economy

·        CGFA, Moody’s Analytics issue mixed judgment on Illinois economy.  The “State of Illinois Economic Forecast: January 2015” was written by the consultancy firm of Moody’s Analytics under contract with the General Assembly’s Commission on Government Forecasting and Accountability (CGFA).   In keeping with its name, CGFA looks to cooperate with the private sector to forecast the future economic trends of Illinois.   Information gathered in this manner is essential to forecast future tax revenues and budget needs, and to enable the State to move towards meeting its constitutional responsibility of a balanced budget. 

The material gathered for the “Forecast” was valid as of the start of this calendar year.  The trends described in this report, however, are long-term trends that are not expected to lose their validity.  While the Prairie State continues to lag behind the economies of many neighboring states, the consultancy firm uncovered economic sectors and geographic areas with continuing and growing strength.  In many cases, the areas identified by Moody’s will already be familiar to Illinoisans.

Economic sectors showing strength in Illinois include Internet technology, financial services, wireless communications, and air transport.  Strong geographic areas center on Chicago’s downtown and North Side, with the River North area continuing a rapid growth trajectory that began in the 1990s.  Moody’s also points out continued strength in Lake County.  In both cases, activity in specific recovery sectors is being spurred by highly targeted financial lending operations.  Many lenders are reluctant to engage in the non-targeted lending patterns characteristic of the pre-2008 period.  Lending and economic growth is being targeted to sectors and geographic areas that are seen as being characterized by talent, access to customers and capital, and transportation resources. 

The Moody’s survey offers mixed encouragement to many other geographic area and economic sectors of Illinois.  Larger cities in Downstate Illinois with a traditional economic profile oriented towards manufacturing, such as Decatur, Peoria, and the Quad Cities, are not benefited by a targeting pattern of this type.  The Moody’s consultants continue to point out several key negative factors that affect Illinois’ standing as a place to create jobs, including a structural budget deficit, a continuing legal challenge to pension reform, a demographic profile oriented towards aging residents with significant health care needs, and ongoing momentum towards lower gains in average Illinois household income.