Illinois is just the fifth state to produce $1 trillion in annualized economic activity.
La Grange, IL: With data showing that Illinois now produces $1 trillion in annualized economic activity, a new study from the nonpartisan Illinois Economic Policy Institute (ILEPI) and the Project for Middle Class Renewal (PMCR) at the University of Illinois at Urbana-Champaign puts the historic accomplishment in context. Illinois is just the fifth U.S. state to reach the $1 trillion mark, following California, New York, Texas, and Florida.
Read the Study, Illinois at $1 Trillion: Putting the Historic Economic Achievement in Context.
Every three months, the Bureau of Economic Analysis (BEA) at the U.S. Department of Commerce releases gross domestic product (GDP) estimates for each state. The data represents the total value of goods and services produced in each state and includes breakdowns by industry. ILEPI and PMCR researchers evaluated GDP data released on Friday, September 30, 2022. In that release, the BEA found that Illinois produced $1.0 trillion in annualized GDP in both the first and second quarters of 2022, from January through June of this year. The data is in nominal or “current” dollars and is not adjusted for inflation.
“A $1 trillion economy is a historic achievement that reveals the strength of Illinois’ businesses and the superior productivity of Illinois’ workers,” said study co-author and ILEPI Executive Director Frank Manzo IV. “Compared to their peers in neighboring states, Illinois’ workers deliver productivity levels that are at least 12% higher, and as much as 28% higher.”
Analyzing GDP data from the second quarter of 2022 for other states, the study found that Illinois’ economy is considerably larger than Pennsylvania’s, a state with a similarly-sized population and workforce. Illinois’ GDP is also more than double the size of Indiana’s, four times bigger than Iowa’s, and larger than 13 other U.S. states combined: Alaska, Delaware, Hawaii, Idaho, Maine, Montana, New Hampshire, North Dakota, Rhode Island, South Dakota, Vermont, West Virginia, and Wyoming. In fact, Illinois’ largest industry, manufacturing, produces more economic activity than the entire economy of New Mexico. Illinois’ real estate and leasing industry by itself adds more to the U.S. economy than all of Idaho.
In addition, comparing the domestic data to information from the International Monetary Fund, the study determined that if Illinois were its own country, it would be the 19th-largest economy in the world—bigger than countries like Poland, Turkey, and Sweden.
“Illinois is the economic engine of the Midwest,” added PMCR Director, study co-author, and University of Illinois at Urbana-Champaign Professor Dr. Robert Bruno. “In particular, the state maintains competitive advantages both nationally and globally in terms of workforce quality, job quality, educational attainment, commitments to infrastructure investments, and access to capital for businesses.”
As significant as crossing the $1 trillion mark is, researchers acknowledged challenges facing the state. Illinois’ economy has been growing more slowly than the rest of the United States, and the gains have not been spread evenly across the state. In the years leading up to the COVID-19 pandemic, Illinois had the 31st-fastest growing economy of the 50 U.S. states. However, if the Chicago area were its own state—as some politicians have facetiously proposed—it would have had the 21st-fastest growing economy, better than all five of the states that border Illinois. Downstate Illinois, meanwhile, would have been the 46th-fastest growing economy.
Researchers shared potential policy options that elected officials could consider to boost Illinois’ economic growth. These range from increasing funding for public education and expanding family-friendly policies like affordable childcare and paid leave to prioritizing paying down pension debt and continuing to make necessary investments in roads, bridges, public transit, high-speed internet, and clean energy infrastructure systems.
“It took more than 200 years for Illinois to achieve a $1 trillion economy, but Illinois could feasibly reach the $2 trillion mark by 2040,” concluded Manzo. “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.”