Economics professor says economy sound despite gloomy retail survey

[March 27, 2021]  By Kevin Bessler

(The Center Square) – As the unemployment situation in Illinois continues to improve, experts are cautiously optimistic about the economic outlook for the state.

The Illinois Department of Employment Security last week reported 15,595 workers filed initial claims for regular unemployment benefits for the week that ended March 20. That number would normally be considered high, but it was down 78 percent from the week before.

Monmouth College emeritus professor of economics Ken McMillan said despite the pandemic shutting down businesses and limiting consumer spending, the economy has been resilient.

“No economy would recover from such a drop unless it was basically strong to start with, so I think that’s the best evidence to me that it was strong to start with and basically remains strong,” McMillan said.

McMillan says the jobless rate could have been a lot worse in the second half of last year to now, and points to a 3.5% unemployment rate in neighboring Iowa.

“We’ve got quite a bit of unemployment nationwide, but it is not nearly as bad as I thought it might have been even with my conviction of the good economy,” said McMillan.

A National Federation of Independent Business survey shows that 13% of small business owners say they will have to close their doors if current economic conditions don’t improve over the next 6 months.

In this June 24, 2019, file photo Ford's employees work on a Lincoln Aviator and Ford Explorer lines at Ford's Chicago Assembly Plant in Chicago.

AP Photo/Amr Alfiky

State Director Mark Grant said the small business recovery remains fragile.

“We’re not out of the long, dark tunnel yet are we?” said Grant. “Many of our businesses have closed, but those that have remained open are hoping that the customers start coming back and I think you’re beginning to see a little bit now.”

The survey also found almost three-quarters (74%) of 2020 Paycheck Protection Program borrowers have applied for loan forgiveness, and 78% of those who have applied for a second-draw PPP loan have been approved and 1% were denied.

As for an economic recovery, 32% of business owners do not expect conditions to fully improve until 2022.

Grant said it is more of a struggle in Illinois with the state’s financial condition and tax situation, but the vaccine should help.

“Lifting restrictions carefully but allowing businesses to get more people in the door and getting more people who want to get out and about to feel comfortable about doing it,” Grant said.