Springfield, IL - Researchers from the University of Illinois System's Institute of Government and Public Affairs say the state could lose 550,000 jobs this year due to the COVID-19 pandemic.
Authors of the report say 40% of the direct losses will be concentrated in trade, transportation, business, and the leisure and hospitality sectors. They project citizens and businesses will lose more than $28.5 billion of income, along with $76 billion in economic output of goods and services from Illinois. Geoffrey Hewings compares the long-term effects of the pandemic to that of flooding or an earthquake.
"What we've got here is an event where the aftershocks are unknown. What we're seeing is some potential increase because the nature of this disease and process is still being studied and still being evaluated," Hewings said.
The Regional Economic Director Emeritus says it has been interesting to analyze the economic downturn over the last 10 weeks. Researchers try to compare this situation to the Great Recession. However, Hewings says the pandemic's financial toll is closer in comparison to the economy after Hurricane Katrina.
"Within a couple weeks, one third of the population in New Orleans had left, and that's a really traumatic transformation of an economy. I had never seen anything like that before."
He notes models usually fluctuate five or six percent per month. "Suddenly, you have this humongous drop. The same thing has happened here with the unemployment claims due to COVID-19."
Returning to work
The task force says a driving factor of recovery will be the amount of people comfortable returning to their workplaces. Hewings says Illinoisans may also see a heightened risk when going out with friends or gathering for sporting events.
"How comfortable are you going to be riding a subway or riding a bus? How comfortable will people be getting on a plane or going out to eat," Hewings asked.
He says these questions from the demand side of an equation are unique to this recession. Hewings notes it doesn't get easier on the supply side either.
"Can a restaurant survive if its capacity is limited to 25 or 50%? The answer for a lot of the restaurants is no," Hewings said. He explains this will limit the ability of restaurant owners to cover the costs with lower occupancy due to social distancing. The amount of staff may not return to levels prior to the pandemic either.
The scholar says these questions point to people being more "risk averse" and 70% of Americans support safety restrictions by the government. "The economy is probably not going to really recover until people are comfortable gathering together. That is going to require a vaccine in which people have confidence."
Changes in spending
He also stresses the economic outlook could become worse if there is a second wave of COVID-19 infections this fall. Data from Earnest Research shows customers are spending more at grocery stores and significantly less at restaurants or entertainment venues.
"There also have been declines in non-food-related shopping, travel and transportation, especially decreases in gas purchases," the authors note. Hewings says these small changes in spending can make an enormous difference for the recovery of those economic sectors.
Hewings says this is the first of several economic impact reports, as the researchers will work with new information from the Illinois Department of Employment Security. That will include data on the impacts on metropolitan communities outside of Chicago broken up by county.