* From the State of Illinois Economic Forecast commissioned by the Commission on Government Forecasting and Accountability and written by Moody’s/Economy.com…

Illinois’ economy strengthened moderately in 2024, allowing the job market to surpass its pre-pandemic level of employment. The pace of job and income growth has slowed further behind the below-average midwestern pace. As it has nationally, the breadth of job creation across industries has narrowed. Strengthening in healthcare, government and leisure/hospitality has kept the economy moving in the right direction despite weakness elsewhere. Professional/business services and finance are in the doldrums, and most other major industries— including manufacturing and transportation/warehousing— have flattened. Illinois’ unemployment rate averaged 5.3% in the fourth quarter, compared with 4.1% in the region and the nation. Joblessness increased partly for an encouraging reason, as the state’s labor force grew at a strong and steady pace. […]

Chicago’s economy is trailing its large peers and the U.S. overall. Payroll employment has been relatively flat for the past year and a half. Finance and professional/business services are losing jobs, and employment in most other industries has been stable at best. Manufacturing and logistics payrolls are slowly trending higher. Healthcare remains the primary job creator, but growth is softening. Tourism-dependent industries are crawling out of a deep hole and progress has slowed markedly. There are other indications that the labor market has loosened. The expanding labor force is a good sign, as Chicago’s labor force growth has lagged the national pace in the previous few years. This has also helped to push the unemployment rate up into the mid-5% range as of December. The employment cost index for Chicago shows wages are growing less than nationally.

The Urbana-Champaign economy is Illinois’ top performer, though some data suggest the labor market is not as strong as it looks. Payroll employment growth is ahead of that in the state, region and U.S. year over year. Anchored by the university of Illinois Urbana-Champaign, known as UIUC, state government leads job creation. Most private-sector industries are moving in the right direction. The Quarterly Census of employment and Wages, a lagged but complete count of jobs, shows that private sector performance has been weaker than it appears in the payroll survey. Specifically, healthcare and construction have worsened since a year earlier. The labor force has risen to new heights, putting some upward pressure on the unemployment rate, which is in the mid-4% range. The pace of residential construction is a touch stronger than in early 2024, though that is not saying much.

The state government is driving progress in Springfield’s economy. Healthcare and office-using industries such as financial and professional/ business services have been sluggish. The size of the labor force has been roughly the same for the past five years. The housing market is generally following national trends, with year-over-year price appreciation on par with that of the state and U.S.

Bloomington’s expansion has slowed. Payrolls have moved sideways during the past year following several years of stronger-than-average growth. Financial and professional/business services have started to recoup jobs lost earlier in the year and before. Improving performance in these higher-paying industries has helped average hourly earnings rebound after plummeting in 2023. However, most major industries have not significantly added to payrolls recently. The labor force has continued to increase, putting some upward pressure on the unemployment rate amid tepid job creation. House price appreciation aligns with the state and U.S. year over year, but new residential construction is weak.

Rockford’s economy is showing signs of life. Total employment remains below the pre-pandemic level but jobs have increased since mid-2024 after a two-year pause in growth. Strengthening in healthcare and leisure/hospitality has offset weakening in manufacturing during this time. Transportation/ warehousing has struggled to gain momentum. With the local Stellantis plant shuttered since 2023, auto manufacturing and related supply-chain employment have been stuck in the mud. The unemployment rate and the size of the labor force have been relatively stable.

Lake County’s economy is sluggish. The labor market has weakened, with employment and the size of the labor force down year over year. The unemployment rate has stabilized at just less than 5%. Payrolls in key manufacturing have been stagnant for the past year, while professional/ business services and finance are deteriorating. The housing market is not much better. Single-family price appreciation has cooled and residential construction remains on ice near Great Recession lows. Healthcare is one of the few bright spots as job growth has regained momentum.

Peoria’s economy has weakened during the last year. Payroll and household employment has turned down, and job losses have caused the unemployment rate to rise even though the size of the labor force has stagnated. Manufacturing has shed jobs, and most of the rest of the economy is sluggish. Healthcare and construction are the only major industries that have added jobs on net since a year earlier. Persistent weakness in housing starts suggests construction payroll growth has come primarily from the nonresidential side. Single-family house price appreciation has been similar to that in the state and U.S.

The economies of the Quad Cities, Decatur and Danville have had a difficult year. The employment situations in these metro areas are among the worst in the state. Key manufacturing industries and downstream business services have shed jobs, offsetting mild gains in healthcare. John Deere has laid off hundreds of factory workers in the Quad Cities as demand for new farm machinery has fallen amid low crop prices and high borrowing costs. The permanent closure of Danville’s Quaker Oats factory has resulted in hundreds of lost jobs. unemployment rates have risen despite shrinking labor forces. Housing markets are also underperforming. House price appreciation has been in line with that of the state and U.S., but that is partly a result of a lack of new-home construction. On the upside, the QCETW data suggest Danville leisure/hospitality performed much better last year than the payroll survey indicated. Industry employment has jumped since the opening of the Golden Nugget Casino

The farm economy faces significant challenges. As they are nationally, Illinois’ farm incomes have retreated from their record highs in 2022, hitting a four-year low in late 2024. expenses remain elevated, and farmers have also had to contend with high lending costs in recent years, limiting their expansion opportunities. Farmers cultivating key crops such as corn and soybeans are receiving lower prices partly because of overproduction, a strong U.S. dollar, and intensifying foreign competition.

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