(The Center Square) – A credit rating agency is forecasting a full job recovery for Illinois and the rest of the country won’t happen until the end of 2022.
Fitch Ratings says the job market was hit hard by the pandemic, and despite recent monthly gains, the recovery in employment has lagged output. Unemployment will not fall back to 4.3%, which is Fitch Ratings’ estimate of the natural rate, until the 4th quarter of next year.
Olu Sonola, senior director with Fitch Ratings, said the huge shock to the labor-intensive leisure and transport industries hit labor demand hard and the recovery will be slow.
“The outsized effect that the pandemic had on the leisure and hospitality and transportation sector and our expectation is that sector will be a drag and we won’t see a full recovery there until 2024,” Sonola said.
Hotels and restaurants in Illinois were crippled during the pandemic with state-imposed capacity limits that are still in place.
The unemployment rate in Illinois is about 7%. As of May 1, nearly 450,000 Illinoisans were collecting unemployment benefits.
Stimulus measures and the reopening of face-to-face service industries are now boosting labor demand. Fitch expects payrolls to expand by 4.6 million this year.
According to Illinois Policy, while total payrolls in Illinois were up 300, private sector jobs took a beating in April and lost 4,000 positions.
Sonola said another factor that makes this job market unique is that some people may have quit the workforce entirely.
“We think that quite a number of people over the age of 55 and a lot of those people will be discouraged,” said Sonola. “We think that workers that dropped out of the labor force would also likely prolong that full recovery.”
Illinois is one of six states that largely dominate employment and economic output. The others are California, Florida, New York, Pennsylvania and Texas. On aggregate, these six states account for 41% of pre-pandemic employment and 45% of GDP. They also account for 40% of the leisure and transportation sector.
Illinois accounts for 4% of U.S. employment, which was down 6.7% in March 2021 compared to January 2020, before the pandemic began.