By Peter Hancock
The Illinois economy shrank by four percent in 2020 as the COVID-19 pandemic wreaked havoc on many of its sectors, although there were signs of a recovery taking place late in the year.
Those preliminary numbers, released last week by the U.S. Department of Labor’s Bureau of Economic Analysis, showed that the leisure, hospitality, and food service sector, was the hardest hit by the pandemic, reporting a nearly 30% drop in economic output for the year.
That was due to the forced closure of bars, restaurants, theaters, amusement parks and most tourist attractions in the early phases of the pandemic, as well as the cancellation of large conventions and business meetings.
According to BEA, real gross domestic product decreased in all 50 states and the District of Columbia in 2020. Utah, with a 0.1% shrinkage rate, fared the best, while Hawaii’s state economy shrank eight percent. The average shrinkage rate for the U.S. as a whole was 3.5%.
Accommodation and food services were a contributing factor to the declines in all 50 states and D.C., and they were the leading contributor to the decreases in 38 states plus D.C.
Other industries that suffered in Illinois included transportation and warehousing, down 14%; non-government services, down 12.3%; manufacturing, down 7.3%; wholesale trade, down five percent; and retail trade, down 2.3%.
The one bright spot in the state’s economy was the agriculture sector, which grew by nearly 68% over the previous year. That was largely the result of a bad harvest year in 2019, followed by a good one in 2020.
When the numbers are broken out on a quarterly basis, however, the biggest drop in economic output occurred during the second quarter, April-June, when Illinois was under the most severe economic restrictions. The economy began to pick up in the third quarter, and by the fourth quarter was growing at an annualized rate of 3.5%.
But the recovery has not been even across all sectors, and the leisure and hospitality industries continue to suffer.
Jacobson says he does not expect the hotel industry to come back fully to pre-pandemic levels until sometime in 2024. The question for his industry, he said, is how many hotels will be able to survive financially until that time.
“I mean, you’ve seen some very notable hotel names across the state, the Palmer House being one of our largest hotels in the state, and obviously the most notable one that’s been foreclosed so far,” he said. “But if a hotel that size, owned by one of the large real estate investment companies can get foreclosed, imagine the little guys who own most of the hotels in our state, how bad they’re suffering.”
Capitol News Illinois is a nonprofit, nonpartisan news service covering state government and distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.
—Capitol News Illinois