COVID pandemic slashes Illinois economy by 4% in 2020

SPRINGFIELD – Illinois’ economy shrank 4% in 2020 as the COVID-19 pandemic wreaked havoc in many of its sectors, although there were signs of recovery at the end of the year .

These preliminary figures, released last week by the Bureau of Economic Analysis at the US Department of Labor, showed that leisure, hospitality and catering sector was hit hardest by the pandemic, reporting an almost 30% drop in economic output for the year.

This was due to the forced closure of bars, restaurants, theaters, amusement parks and most tourist attractions in the early stages of the pandemic, as well as the cancellation of major conventions and business meetings.

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“You look at the different industries, many of which have been affected by COVID, but I don’t think any industry has been affected as much as hospitality and tourism,” said Michael Jacobson, executive director of the Illinois Hotel and Lodging Association, during an interview. “We saw the impacts start before some people even realized what COVID was because you started to see large-scale conventions and meetings start to cancel each other out. And unfortunately, these same events that are truly the cornerstone of our industry are going to be among the last events to start over. “

According to the BEA, real gross domestic product declined in all 50 states and the District of Columbia in 2020. Utah, with a shrinkage rate of 0.1%, did the best, while the economy of the state of Hawaii fell 8%. The average withdrawal rate for the entire United States was 3.5%.

Accommodation and food services contributed to the declines in all 50 states and DC, and was the primary contributor to the declines in 38 states plus DC.

Other industries that suffered in Illinois include transportation and warehousing, down 14%; non-government services, down 12.3%; manufacturing, down 7.3%; wholesale trade, down 5%; and retail trade, down 2.3%.

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The only bright spot in the state’s economy was the agricultural sector, which grew nearly 68% from the previous year. This was largely the result of a bad harvest year in 2019, followed by a good one in 2020.

However, when the numbers are broken down on a quarterly basis, the biggest drop in economic output occurred in the 2nd quarter, April-June, when Illinois was under the most severe economic restrictions. The economy started to recover in the 3rd quarter and in the 4th quarter it was growing at an annualized rate of 3.5%.

But the recovery has not been uniform across all sectors, and the leisure and hospitality industries continue to suffer.

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Jacobson says he doesn’t expect the hospitality industry to fully return to pre-pandemic levels until 2024. The question for his industry, he said, is how many hotels will be able to? survive financially until then.

“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 that has been seized up to. present, ”he said. “But if a hotel of this size owned by one of the big real estate investment companies can be foreclosed, imagine the little guys who own most of the hotels in our state, how badly they are.”

Peter Hancock: [email protected]

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