A new study of business growth sounds a rare positive voice against a chorus of negativity about the Illinois economy.
A report by Economic Modeling Specialists International says Illinois ranked third among the states in new business establishments created from 2009 through 2012.
Only Texas and New York state have seen more new businesses established since the recession, the report says. Illinois ranked seventh over the same period in new business establishments per capita, higher than Texas.
EMSI’s data came from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages. The 2012 data was the most recent available.
Illinoisans have been getting a lot of mixed messages about the state’s economy. Either it’s awful and getting worse or it’s much-improved and getting better, depending on whose report or prognostication you take to heart.
The University of Illinois Flash Index for January was 107.2, comfortably above the 100 level that is the dividing line between growth and decline. The index is a weighted average of growth rates in corporate earnings, consumer spending and personal income.
J. Fred Giertz compiles the index for the university’s Institute of Government and Public Affairs and says the Illinois economy continues showing slow though steady growth.
“Illinois is making a comeback,” Gov. Pat Quinn said in his recent State of the State address. But Bruce Rauner, one of this year’s Republican gubernatorial hopefuls, says the state is in a “long-term death spiral.”
Moody’s Analytics predicts Illinois’ job growth this year will be the nation’s 40th worst. The Tax Foundation says the state has only the nation’s 31st best business climate, down 15 spots since 2011.
On the other hand, Site Selection magazine last year said Illinois ranked fifth in the nation for new and expanded corporate facilities.
The average person must wonder what to think about the state’s economy and which way it is headed.
“I think it’s like a lot of other situations,” said Doug Whitley, president of the Illinois Chamber of Commerce. “You take all the information into account and try to work out where the truth is. I don’t think you can rely on any one of these surveys as a good gauge by itself.”
John Navin, professor and interim dean of the School of Business at Southern Illinois University Edwardsville, said Illinois’ economic growth continues to be hindered by policy uncertainties.
“The simple answer is that until someone gives us a clear picture of what Illinois is going to do this year in terms of taxes and budget, nobody really knows” where the economy is going, he said.
EMSI found that 22 percent of the nation’s new business establishments during the 2009-2012 period were in Texas. New York state had 16 percent of the total and Illinois, 14 percent. Texas ranked ninth, however, in new business establishments per capita, behind Illinois’ seventh-place showing.
EMSI said Texas, New York and Illinois are alike in having major metropolitan centers, diversified economies and construction sectors that have fared better than those in other parts of the country.
Gov. Quinn touted the report in February.
“We know that more jobs are needed and we are working to get them, but this report shows that our economy is getting stronger every day,” he said in a release. “We wouldn’t see this business growth without our skilled workforce, our great advantages in location and our culture of innovation.”
Quinn particularly is taking pride in an announcement Feb. 23 by the U.S. Department of Defense, which is awarding a $70 million federal grant to UI Labs to establish the Digital Manufacturing and Design Innovation Institute in Chicago, which he and U.S. Sen. Dick Durbin, D-Illinois, say can create thousands of jobs in advanced manufacturing fields, improve military readiness and make the economy more competitive. UI Labs leads a consortium of more than 570 industry, academic, government, community and organizational supporters and partners that have committed $250 million to the project — more than tripling the federal investment, Durbin said.
The state’s unemployment rate remains stubbornly high, among the highest in the nation. In a fourth consecutive month-to-month decline, it fell to 8.6 percent in December from 8.7 percent in November. The national unemployment rate was 6.6 percent.
Dave Roeder, spokesman for the Illinois Department of Commerce and Economic Opportunity, said Illinois’ economic growth has been outpacing its midwestern neighbors since June.
“Illinois is a real comeback story right now,” Roeder said. He said some of the improvement is policy-driven.
“Pension reform was probably the single most important thing that could have been done to tackle our debt problem,” Roeder said. “It showed our ability to take on tough problems and the bond ratings improved accordingly.” In December, with bipartisan support, the Legislature passed sweeping legislation to reform state pensions and cut costs.
Roeder said businesses find Illinois attractive because of its central location, its extensive transportation network, its skilled workforce and its quality of life.
“In the end, businesses make location decisions for hard-hearted reasons,” he said. “They look beyond the day’s political rhetoric.”
Whitley, the Illinois Chamber president, likes the state’s economic prospects though he is no cheerleader for state government.
“We know there has been some uptick,” he said. “We began to turn around about three years ago. The Illinois economy is improving despite an inept government.”
Whitley said the state has remarkable economic strengths that endure over time, among them productive farmland, abundant natural resources, a large and skilled workforce, an ideal location in the center of the country and an extraordinary transportation network that includes access to the world’s waterways. He said intangibles like confidence and pride also help make Illinois strong.
Whitley plans to retire in June after 12 years as the Chamber’s president. He believes Illinois leaders should be focused on reducing unemployment.
“Unemployment should be the Number One issue in the election and in the minds of public officials,” he said. “They should not be happy until it is well under 6 percent.”