Many questions have been brought up concerning this recession.

• How do we compare to other regions?
• How do we gauge our local economy?
• Is it really better here than other parts of the US?
• Are we going to fall back into a situation like the 1980’s?
• How much of our workforce is tied to Caterpillar today?

Wednesday, February 25, 2009 The Heartland Partnership held a press conference to release information including a comparison of the December 2008 unemployment rate of the Peoria MSA to other communities across the nation, employment and unemployment rates from the 1970’s to today, and current distribution of employment by industry sector of the Peoria MSA.  We hope the information we have gathered and released will lend some insight into what’s happening with our economy.  We are deep in a recession and  are no way recession proof.  However, we are faring a bit better than many other areas of the United States. That is thanks in part to lessons learned in the past and our watchful eye on the future.

Follow this link to watch The Heartland Partnership press conference regarding the release of the economic comparison information.  At this link you will also find a PDF of the complete document supporting these findings.

HOW WE LOOK AT OUR ECONOMY:

There are three things we are keeping an eye on to gauge the local economy:

Housing valuation—a measure of community wealth.  The Peoria Area Association of Realtors says Peoria home sales were a bright spot in Illinois.  Sales in Peoria were down 11.6% compared to 23.3% for the state and home prices remained stable.  
Retail sales—we’ve seen a shift of about 3% locally, mostly in durable goods sector.  This does mean there is a drop in sales tax revenue and that has many municipalities concerned. The current retail sales numbers are very similar to 2005.
Employment— a good measurement of the health of the economy.  In 2008 the average number of people employed in our region was approximately 194,000.  This is a growth of 50,000 over the early 1980’s when we had a 16% unemployment level.  

COMPARING THE REGION:

Thousands of people are losing their jobs every week.  Every sector and every community across the nation is feeling the effects of this economic downturn.  Central Illinois is certainly not an exception.  However, When comparing the Peoria MSA with the rest of the country, you can see that the Peoria area fares better than a majority of the nation.  These unemployment rates are from December 2008 and local economists believe that the rates will continue to rise and we'll likely top out at 8-9%.  However, they don’t believe any one community will see a significant spike because the job cuts are hitting all sectors rather evenly.

ADDED NEARLY 50,000 NEW JOBS

In the 1980’s a significant percentage of the Peoria area workforce was directly employed by Caterpillar.  That percentage is not as high today.  Caterpillar remains a vital part of our economy, but we are fortunate that we have broadened our employment base.  Since the 1980’s the Peoria area has diversified its economy and added nearly 50,000 net new jobs which is one of the highest percentage increases in the country.
The majority of jobs have been created in industries outside of the manufacturing sector such as Healthcare, Transportation, Technology and Professional/Technical Services.  We also expect to see small business growth as our economy recovers. It is estimated that nearly 85% of new job generation comes from small businesses in any economy.

IT’S NOT THE 1980’S

Many people are concerned that this economic situation will force us into circumstances similar to those of the 1980’s, but the present situation is not the same. For example, the catalyst for this recession is much different than that of the 1980’s and this is a global situation not just a regional one.

It is true that unemployment numbers are on the rise nationwide, but presently this area is doing much better than two decades ago.  In December 2008 the Tri-county area saw unemployment at 6.4%. We expect January and February numbers (released in mid-March) to be higher, but not as high as the 1983 level of 16.1%.

In the 1980's people began leaving the region in search of work so when the recession ended we didn’t have the skill sets to match the jobs that were available.  That is called structural unemployment.  Luckily that is NOT the case in our current environment.  
 

WHERE ARE ALL THESE JOBS?

In the past six to seven years we have seen job growth across the board through a broader spectrum of industries.  Agriculture, logistics, technology and healthcare experienced a tremendous growth in that time period. In 2008 we had an average of just over 194,000 workers in the tri-county employed within 13,300 business interests in our region.  The breakdown of employment in different industry sectors looks like this:

Many people have raised an eyebrow when they hear only 8% of the local workforce is from Caterpillar.  But it is true.  There are 15,000 employees employed directly by caterpillar today out of our 194,000 person employed workforce.  This number refers only to those directly employed by Big Yellow.  Another 4% of our total workforce is tied to caterpillar through contract work and the traditional supply chain. 
Bradley University Economist Dr. Robert Scott says people do have a hard time accepting these numbers but we need to take into consideration how global Caterpillar is, 50% of its workforce is outside the United States.  Caterpillar also utilizes a far-reaching global supply chain.  

We are deep in a recession and are no way recession proof.  However, we are faring a bit better than many other areas of the United States. That is thanks in part to lessons learned in the past and our watchful eye on the future.