Illinois’ Economic Growth Is Worse than During the Great Depression

By Illinois Policy. Originally published at IllinoisPolicy.org.

Illinois’ total state economic activity has increased by only 4 percent since 2007, which is lower than the U.S.’ 10 percent GDP growth during the worst decade of the Great Depression.

There are fewer Illinoisans working today than there were 10 years ago. Millions of Illinoisans are feeling the brunt of the state’s economic pain and financial meltdown in the form of joblessness and hopelessness. Too many families are dealing with unemployment and underemployment, and too few are able to find their dream jobs in the Land of Lincoln. That’s because Illinois has the Great Depression economy of the Midwest.

In fact, Illinois’ economic growth is worse than during the worst years of America’s Great Depression. Illinois’ gross state product, which measures total economic activity, has increased by barely more than 4 percent over the past decade. In comparison, the U.S. gross domestic product during America’s Great Depression increased by nearly 10 percent during the worst decade of the Great Depression, from 1930-1939.

illinois gdp growth

America’s Great Depression started off worse from 1930-1932, but the recovery came on stronger. By contrast, Illinois did not have as steep of a fall during the first years of the Great Recession, but Illinois’ recovery from the Great Recession has been abysmal.

illinois gdp growth

Illinois suffers from depressed economic growth, and state policymakers have repeatedly chosen the path that prevents prosperity. Illinois lawmakers hiked state personal income taxes by 67 percent in 2011. While those income tax rate increases partially sunsetted in 2015, local property and sales taxes have also risen. In the face of economic calamity, Illinois has tried to tax its way back to prosperity.

Taxes keep going up because the state has failed to address its deepest problems –gargantuan pension and retiree health care debts and uncontrolled spending on government payrolls. Illinois’ debts are spiraling out of control, its bonds are headed for junk status, and politicians have responded by repeatedly raising taxes.

The debts need to be brought under control because good job opportunities, economic growth and income-earning power are fleeing the state. That’s why Illinois has the worst personal income growth in the entire country – tied only with Nevada – over the Great Recession era. Personal income has grown by only 0.8 percent per year in Illinois from the end of 2007 through 2016.

illinois gdp growth

 

Illinois’ governing class has failed to make the state sustainable for future generations. Illinoisans are fleeing the state, and millennials – made up of college students and young working adults – are getting out fastest.

Illinois now loses, on net, one person every 4.6 minutes to other states. As a result, Illinois has been shrinking since July 2013, according to the U.S. Census Bureau. Illinois’ population is down by 78,000 over the last three years due to massive out-migration. In contrast, all states around Illinois are growing.

illinois outmigration

 

Illinois’ problems have been caused by political failure to embrace reforms that would bolster economic growth and bring debts under control. The state’s political leadership has racked up hundreds of billions of dollars in debts that likely can never be repaid, yet the General Assembly refuses to change course. Taxes have consistently gone up, debts are spiraling out of control, and yet the Illinois legislature hasn’t changed anything of substance.

More taxation is not the answer, and Illinoisans have had enough. Sixty-four percent of Illinoisans oppose another income tax increase as part of a budget deal, according to a May poll commissioned by the Illinois Policy Institute. More taxes would simply sink into a black hole of debt that politicians have shown no interest in fixing.

Illinois needs to choose a course of reform or accept the inevitability of state and municipal bankruptcy. The state is bleeding red ink, and will continue to do so until lawmakers bring debts under control. The state’s economy is struggling under the current burden of debt, taxation and regulation; more of the same will inevitably fail.

It’s time to change course, or Illinoisans will continue to change their residence to other states. Until the state adopts meaningful reform, Great Depression economic growth will be the norm in the Land of Lincoln.

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  • Zartan

    The enormity of government intervention is mind boggling; however, the only reason nothing has crashed is becuase the US governmment is buying, and, or manipulating everything. QE is Eternal and cannot be stopped! Trillions to buy their own bonds, but NO downgrades? Notice … the Manipulation?

    The US government bought all distressed mal-investments and bailed out bankers using the peoples treasury. Nobody complained. Simply, every report is being manipulated for dow advancement, while Jobs are still being short sold to Slave Labor! Nothing is legitimate and all the real data, like foreclosures, is being hidden from the public.

    America has been short sold by banker and governmment collusion, if Americans do not fight back, they will be totally wiped out and told, naturally, that it is their fault. Who could tolerate such an insult … Only Americans!

  • WillDippel

    Here is an article that compares the economic growth rates for all U.S. states:

    http://viableopposition.blogspot.ca/2017/06/americas-uneven-economic-health.html

    While the Fed is behaving as though all is well in the U.S. economy, this study would suggest that negative economic pressures are building.

  • Zartan

    The US is being looted by “corporate conglomerates/government capitalists” who export Industry, Jobs, and Labor to Slave labor Nations. Wages have been flat, while Massive Inflation on homes skyrocketed! What could be expected from GDP? This stuff is so easy, but people do not want to look at reality. Rust Belts adorn this nation and people are under-paid, SO, Naturally GDP will stink.

    All the Other nations have Educational benifits for its citizens and healthcare, while the US sucks the peasants dry. They have no money to consume. Credit Expansion only leads to default.

    • Zartan

      Oh, and People … “CREDIT” was invented by ROME to enslave people. Think about that the next time you CHARGE IT, SLAVES!

  • In the Great Depression, the goal initially was to stimulate the economy, restore growth. However you want to characterize it, the goal was inclusive.
    This time, with the Great Recession (although I think Great Depression II is far more accurate, specially given the lack of any broad recovery and growth), our masters wanted to strengthen extractive practices as much as possible.
    And that’s how the phenomenon referenced in this piece happened.