Frank Manzo IV: Celebrating, and growing, Illinois’ $1 trillion economy

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Illinois recently received good economic news that residents and elected officials should recognize.

According to data from the Bureau of Economic Analysis at the U.S. Department of Commerce, Illinois now produces $1 trillion in annualized economic activity. Illinois is just the fifth U.S. state to reach the $1 trillion mark, following California in 1997, New York and Texas in 2005, and Florida in 2017.

This historic accomplishment is a testament to the competitiveness of Illinois’ businesses and the productivity of our workers. It is the result of our state’s commitment to making necessary infrastructure investments, our high levels of educational attainment, our family-supporting incomes that deliver robust consumer spending and our greater access to capital for businesses.

New research from the Illinois Economic Policy Institute, where I am the executive director, and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign has put this economic achievement into perspective.

If Illinois were a country, we would have the 19th-largest economy in the world. Our economy is larger than 13 other U.S. states combined. It is also larger than the economy of Pennsylvania, a state with a similarly sized population and workforce.

We have private-sector industries that contribute more to the United States’ gross domestic product than entire states. Our largest industry is manufacturing, which produces $132 billion in economic value every year. That is more than the total economic activity in New Mexico. Illinois’ health care industry adds more value than all of South Dakota.

To be clear, this feat is in “nominal” dollars, meaning that it’s not adjusted for inflation. Consider a highly paid worker who earned a $95,000 salary last year, received a raise and now makes $100,000 annually for the first time. Our state is similar to that worker. Illinois’ income has grown from $946 billion in 2021 to more than $1 trillion today. These are significant gains, even if they’re smaller than the increase in prices — which have risen at their fastest pace in four decades.

Illinois didn’t become the economic powerhouse of the region by accident. Any other nearby state could have been the first in the Midwest to cross the $1 trillion line. But our position as a transportation hub at the heart of the U.S. and our workforce productivity — which is significantly higher than that in every neighboring state — put us in the lead.

Illinois could pursue a number of public policies to lock in these competitive advantages and build on them. These include investing more in education; making community colleges tuition-free; continuing to make necessary investments in transportation, broadband and clean energy infrastructure; and passing laws that support employment for working families — such as by expanding affordable child care options, creating a refundable child tax credit and enacting paid family and sick leave policies.

Current and future members of the Illinois General Assembly also must be responsible stewards of taxpayer dollars. Steps such as consistently balancing the state budget and paying down pension debt when tax revenues exceed expectations are simple ways to improve investor confidence. Highlighting ways that Illinois is great for both businesses and workers — instead of persistent “crisis” and “exodus” narratives — would also help.

Our research shows that, even though it took two centuries for Illinois to get to $1 trillion, the state could double its economic activity and reach $2 trillion in less than two decades. This is achievable if the state delivers skilled workers, quality infrastructure, innovative companies, balanced budgets and strong communities.

With sound public policies, Illinois can attract, develop and retain productive workers while promoting broad-based prosperity for residents in every corner of the state.

Frank Manzo IV is executive director of the Illinois Economic Policy Institute, a nonpartisan, nonprofit research organization.

Submit a letter, of no more than 400 words, to the editor here or email letters@chicagotribune.com.

via Chicago Tribune

October 17, 2022 at 07:59PM

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