Illinois economy grows 4.3%, riding national trend

Illinois saw strong economic growth in the third quarter of 2025, largely tracking national trends.

Illinois’ economy grew 4.3% in the third quarter of 2025, matching national growth but trailing many Midwestern states.

Illinois joined a nationwide economic wave as U.S. real gross domestic product expanded 4.4% in Q3, a far cry from the 0.5% contraction it faced in the first quarter, according to new data from the U.S. Bureau of Economic Analysis.

Illinois’ Q3 growth ranked 29th in the nation and 10th in the Midwest, making it clear the state is largely riding broader national growth rather than outperforming because of local vigor.

Why did Illinois’ GDP increase?

The broader economy has remained remarkably resilient despite ongoing uncertainties. The third quarter saw stronger consumer spending, driven by health care services, international travel, motor vehicles and information processing equipment.

This translated to Illinois seeing growth in virtually all private sectors except agriculture. Government sectors declined. The biggest contributors were the information sector and the finance and insurance sector.

The information sector posted the largest gains in the third quarter. Illinois’ Information sector has been especially strong during the past year, reflecting continued expansion in technology-based industries, particularly in Chicago.

The financial services and insurance sector also continued its momentum, posting the second-largest growth in both Illinois and the nation. Chicago is a leader in financial services with 24 of its largest firms carrying $764 billion in assets while employing nearly 2,000 portfolio managers.

Notable growth was seen in the professional, scientific and technical services sector as well as the manufacturing sector.

Illinois’ long-term problems remain

While this third-quarter growth is a positive sign, Illinois’ persistent long-term economic underperformance remains a serious concern. Since 2019, Illinois’ real GDP has grown just 7.9% compared to a 17.6% national average. This ranks Illinois 46th in the nation and near the bottom in the Midwest. By comparison, the fastest-growing state, Florida, has expanded nearly 31% in that time, nearly four times faster than Illinois.

Economists expect national GDP growth to slow and eventually normalize at around 2% in the coming years, meaning Illinois can’t bank on a large national expansions for much longer. To maintain sustainable growth, lawmakers will have to focus on deep local structural issues – such as high taxes and burdensome regulations – that keep the state constantly underperforming.

Illinois has clear advantages. Its central location has made it a historically important state for transportation and logistics. Like other Midwestern states, Illinois remains strong in manufacturing and agriculture along with Chicago serving as a global center for finance, tech and tourism.

But high taxes and financial uncertainty have undercut these advantages, making it hard for businesses to invest in the state.

Illinois needs reform

To strengthen its economic position, Illinois must focus on structural reform. State leaders should:

• Reduce its heavy regulatory burden, which ranks fourth in the nation and costs it economic growth.
• Build up its labor pool, including apprenticeship programs and reforming occupational licensing barriers.
• Reduce economic and budgetary uncertainties through streamlined performance analysis and lengthier review times for lawmakers.
• Control high government spending that has led to higher taxation.
• Enact spending caps to match economic growth.

Without structural reforms, this economic rebound likely will be short-lived.