By KEVIN BESSLER for the Illinois Radio Network
SPRINGFIELD, Ill. (IRN) — Gross domestic product is on the decline in Illinois and 46 other states, sparking fears of a possible recession.
GDP is a measure of economic activity and measures the monetary value of final goods and services.
The Bureau of Economic Analysis reports that Illinois’ GDP decreased by 2.5% overall in the first quarter of 2022, more than any other Midwestern state other than Kentucky, while the nation as a whole decreased 1.6%.
Nondurable goods manufacturing, retail trade, and finance and insurance decreased 17, 10.2, and 7.1% respectively for the nation and the leading contributors to the decrease in real GDP. The report said these three industries contributed decreases in all 50 states.
The report cited oil and gas extraction and mining as contributing to GDP decreases in Illinois and 48 other states.
Only Michigan, Massachusetts, New Hampshire and Vermont saw overall increases in GDP in the first three months of this year.
“To say that GDP is down this first quarter may have more to do with last year at that quarter,” said Tammy Batson from the Northern Illinois University Department of Economics. “COVID was out and they were ready to get going.”
The latest reading from the Atlanta Federal Reserve Bank’s GDPNow model indicated July 1 that real gross domestic product shrank by 2.1% in Q2. If further readings confirm that the economy did shrink in Q2, the technical criteria for a recession will be met, which is defined by two consecutive quarters of negative growth.
The official call is made by a panel of economists convened by the National Bureau of Economic Research. The private nonprofit group defines a recession as a “significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
GDP may not be the only measure to determine a recession. Whether the country is in fact headed for one or or already in a recession is a growing concern for corporate chief executives and their employees, the Federal Reserve and policymakers.
Economists generally believe we are not currently in a recession because there has never been a recession declared without loss of employment, and thousands of jobs are being added in the U.S. on a monthly basis.