Illinois sees among worst spending drops early in COVID-19 pandemic

Illinois sees among worst spending drops early in COVID-19 pandemic

While the start of the COVID-19 pandemic caused consumer spending to drop across the U.S., the decline was worse in Illinois. Gov. J.B. Pritzker’s harsher restrictions appear to be the culprit.

Personal consumption expenditures fell by 2.6% from 2019 to 2020 across the nation as the COVID-19 pandemic began, but they fell a full percentage point more in Illinois – the nation’s 11th biggest drop.

That should be no surprise, because Illinoisans faced some of the most severe pandemic public health restrictions, according to data from the Oxford COVID-19 Government Response Tracker.

The drop in consumer spending was concentrated in services. Overall, consumer spending on services dropped 6.8% in Illinois, the biggest drop among all neighboring states, and the eighth largest decline in the country.

Within the service economy, Illinois saw less consumer spending across the board. The three industries hurt the most were: transportation, ranked seventh in the U.S. for biggest decline in consumer spending; recreation, ranked 21st; and food services and accommodations, ranked 10th.

During the pandemic, spending on housing and utilities rose across the country. Illinois saw the sixth slowest growth, despite a relatively more affordable housing market before the pandemic.

Consumer spending on goods rose across the country, at a rate of 3.9%. Illinois was on par at 4% growth in spending on goods. Spending on durable goods rose 6.7%, with a 2.6% rise on non-durable goods in Illinois.

Spending growth varied widely in the U.S. among types of goods: Recreational goods and vehicles rose at 14.9%; food and beverages purchased for off-premises consumption rose at 10.2%; and furnishings and durable household equipment spending rose 8.4%. Gasoline and energy spending dropped 27% while clothing spending dropped 8.4%.

The service sector was disproportionately hurt by the pandemic and the severity of government restrictions on economic activity.

Despite the lack of direct evidence that more severe COVID-19 business and school closures saved more lives, Illinois Gov. J.B. Pritzker’s stated benchmark for reopening the state’s economy was a vaccine or highly effective treatment, or the elimination of new cases over a sustained period through herd immunity or other factors.

While Pritzker’s decision may have been well-intended, the decline in consumer spending because of the pandemic and mandated business closures meant Black Illinoisans and parents – especially mothers who disproportionately worked in service industries – suffered more severe COVID-19-related job loss.

During the sudden economic contraction, workers in jobs that had been deemed “non-essential” were idled at a higher rate than other workers. Those who couldn’t work from home were often minorities and women, those without a college degree and in low-paying occupations.

Policy and definitions mattered as Illinois began the pandemic in 2020. The problem is the Illinoisans who were most vulnerable suffered the most from those government decisions about policy and definitions.

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