SPRINGFIELD – The Illinois economy contracted 4 percent in 2020 as the COVID-19 pandemic wreaked havoc in many sectors, although there were signs of a recovery towards the end of the year.
These preliminary figures, released last week by the U.S. Department of Labor’s Bureau of Economic Analysis, showed that the leisure, hospitality and hospitality sectors were hit hardest by the pandemic, seeing economic output declined nearly 30 percent for the year.
This was due to the forced closure of bars, restaurants, theaters, amusement parks and most tourist attractions in the early stages of the pandemic, as well as the cancellation of major conventions and business meetings.
“You look at the different industries, many of which have been affected by COVID, but I don’t think any industry has been as hard hit as hotels and tourism,” Michael Jacobson, executive director of the Illinois Hotel and Lodging Association, said during an interview . “We saw the impact kick in before some people even realized what COVID was because conventions and large-scale meetings were canceled. And unfortunately, the same events that really are the lifeblood of our industry will be some of the last events, which start again. “
According to BEA, real GDP fell in all 50 states and the District of Columbia in 2020. Utah performed best, shrinking 0.1 percent, while Hawaii’s state economy contracted 8 percent. The average contraction rate for the US as a whole was 3.5 percent.
Housing and meal services contributed to the declines in all 50 states and DC, and they were key contributors to the declines in 38 states plus DC
Other industries that suffered in Illinois were transportation and storage, down 14 percent; Non-government services down 12.3 percent; Production down 7.3 percent; Wholesale Down 5 Percent; and retail by 2.3 percent.
The only bright spot in the state’s economy was the agricultural sector, which grew nearly 68 percent year over year. This was largely the result of a bad crop year in 2019, followed by a good one in 2020.
However, if the numbers are broken down on a quarterly basis, the biggest decline in economic output was in the April-June 2nd quarter, when Illinois was under the toughest economic restrictions. The economy began to pick up in the third quarter and grew at an annual rate of 3.5 percent in the fourth quarter.
However, the recovery has not been felt in all sectors and the leisure and hospitality industries continue to suffer.
Jacobson says he doesn’t expect the hotel industry to fully return to pre-pandemic levels by anytime in 2024. The question for his industry is how many hotels could financially survive up to this point in time.
“I mean, you’ve seen some very notable hotel names across the state, with the Palmer House being one of our largest hotels in the state and obviously the most notable one to have been foreclosed,” he said. “But if a hotel this size owned by one of the big real estate investment firms can be foreclosed, imagine how badly the little folks who own most of the hotels in our state are suffering.”
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