A few things first about some upcoming opportunities. We have a virtual conference next Thursday March 11 at 11:00 AM with John Ferguson, Senior Vice President & Senior Portfolio Manager with Northern Trust. Please join us!
Economic Trends & Reopening of the Economy
- History: Economic and Market Review through the Pandemic
- Current Events: Market and Economic Signs that we are at an inflection point
- Outlook for the Future: Is this a remake of the roaring 20’s?
Our State of the City Address with Joliet Mayor Bob O’Dekirk is back on the calendar for Monday, March 22 at 11 AM. Make sure to sign up here.
Also, please consider taking a few minutes to fill out the 2021 Small Business Needs Assessment. The Joliet Region Chamber of Commerce in partnership with the Illinois SBDC at Joliet Junior College asks for your assistance in our effort to best serve small business. Your input is extremely valuable and we thank you for your time in completing this survey.
Today’s update contains information the usual Thursday jobs report, the Senate vote on the covid aid bill, Illinois economy return, a new report on long term debt, PPP extension ask, and the loss of an unemployment benefits program.
*Daily Coronavirus update brought to you by Silver Cross Hospital
Senate Votes to Take Up Covid Relief Bill
Senate Democrats voted in approval on Thursday to take up a sweeping $1.9 trillion coronavirus bill, teeing off what’s expected to be a days-long sprint to pass the legislation. The Senate voted 50-50 to proceed to the coronavirus relief legislation, with Vice President Harris breaking the tie to advance the bill.
“The Senate is going to move forward with the bill. No matter how long it takes, the Senate is going to stay in session to finish the bill this week,” Senate Majority Leader Charles Schumer (D-N.Y.) said from the Senate floor on Thursday ahead of the vote.
Thursday’s vote comes after a delay on getting the green light from the Congressional Budget Office (CBO) ensuring that the Senate’s bill, which largely reflects the House measure, complied with reconciliation rules, a budget process that is allowing them to bypass a 60-vote filibuster. In an expected change, the Senate’s version of the coronavirus bill strips out language increasing the minimum wage to $15 per hour and lowers the cutoff for receiving stimulus checks to $80,000 for individuals and $160,000 for couples.
A Senate Democratic aide said on Thursday that the bill also provides $510 million for FEMA homeless shelter providers, increases the total amount of Amtrak relief funding by $200 million and places “new guardrails” on the $350 billion for state and local governments.
Even though the Senate voted on Thursday to take up the legislation, the chamber still faces potentially days before it can take a final vote. The bill will need to also bounce back to the House, which will need to approve any changes made by the Senate.
Sen. Ron Johnson (R-Wis.) is making Senate staff read the entire text of the Senate bill, which senators estimate could last anywhere from five to 10 hours. “At a minimum, somebody ought to read it. … How can you craft effective amendments on a bill that you haven’t even seen or haven’t been given time to read,” Johnson said.
After that the Senate still faces up to 20 hours of debate before it could start a marathon session known as vote-a-rama, where any senator who wants to force a vote on an amendment will be able to. Senators acknowledged that they are largely in the dark about how long the entire process will last.
Thursday Jobs Report
The number of Americans applying for unemployment benefits edged higher last week to 745,000, a sign that many employers continue to cut jobs despite a drop in confirmed viral infections and evidence that the overall economy is improving.
Today’s report from the Labor Department showed that jobless claims rose by 9,000 from the previous week. All told, 4.3 million Americans are receiving traditional state unemployment benefits. Counting supplemental federal unemployment programs that were established to soften the economic damage from the virus, an estimated 18 million people are collecting some form of jobless aid.
On Friday, though, economists have forecast that the government will report a strong job gain for February of near 200,000, which would raise hopes that layoffs will slow. Optimism is rising that increasing vaccinations and a new federal rescue aid package that will likely be enacted soon will spur growth and hiring in the coming months. Many analysts foresee the economy expanding at an annual rate of at least 5 percent in the current quarter and 7 percent for all of 2021. A good reminder to join us next Thursday to hear more about the economy!
Already, crucial sectors of the economy are showing signs of picking up as vaccinations increase, federal aid spreads through the economy and the Fed’s low-rate policies fuel borrowing and spending. Last month, America’s consumers bounced back from months of retrenchment to step up their spending by 2.4% — the sharpest increase in seven months and a sign that the economy may be poised to sustain a recovery.
When will Illinois Regain Jobs Lost to COVID?
Illinois’ economy will recover along with the nation’s as COVID-19 pressures lift, but it’s going to be a long road for us, with the state unlikely to return to its previous employment level until at least 2023. That’s the bottom line of a new forecast prepared by Moody’s Analytics for the Illinois Legislature’s fiscal unit, a report that is pretty dour, projecting Illinois in the long run will continue to markedly lag the nation and even the rest of the Midwest until it gets its finances in order and reverses its population drain. Read the report as an attachment to this email.
“The near-term outlook for Illinois closely resembles that for the U.S.,” says the report for the Illinois Commission on Government Forecasting & Accountability. “The economy will begin recovering in earnest in mid-2021, and by the end of the year the unemployment rate will clock in at just under 6 percent,” in line with the national average but a bit higher than our Midwest neighbors.
That would be a bit of an improvement over 2020, when Illinois’ performance generally tracked that of the Midwest and other states, but fell behind by the end of the year. Illinois’ unemployment peaked at 16 percent in June 2020 and averaged 8.4 percent in the fourth quarter.
While the mid-term view is optimistic, “It will be at least 2023 before the (local) economy is back in full swing,” Moody’s says. “It will take at least that long for the Illinois labor market to recover the 400,000 jobs it is still down since the pandemic hit, get everyone who left the workforce during the pandemic back in and reduce the unemployment level to the pre-crisis level.” Illinois’ unemployment rate in January 2020 was 3.6%. In December, the latest data available, it was 7.6%.
Chicago again should be a statewide leader in the long term, despite “muted” tourism and meetings that hit the hospitality and lodging industries hard. (Fourth-quarter hotel occupancy in the city averaged 32 percent, compared with 73 percent fourth-quarter 2019).
Among the pluses on the horizon: What Moody’s suggests will be a continuing return of companies and headquarters to the urban core and a loosening of national restrictions on immigration, a key source of new residents here. However, the report adds: “The success of the state’s economy, and particularly that of the Chicago metro area, will depend on the strength of its tech sector, including computer systems and design and biotechnology. Tech companies that can meet the needs of Illinois’ manufacturing base will also be successful.” Logistics is a strength, too.
Ultimately, it says, “Illinois has what it needs to remain a top business center, as long as it can solve the fiscal problems that are eroding its edge in the competition for talent, jobs and capital.” The state has a high educational attainment level, superb transportation links and below-average costs. But unless fiscal pressures—specifically, soaring pension costs—are solved, “The state will grow a step behind the Midwest average and a few steps behind the nation over the extended forecast horizon,” the report concludes. “Over the next five years, employment in Illinois is forecast to increase 6.7 percent, below the 7.7 percent increase for the Midwest and 8.8 percent rise nationally.”
Another report issued today by Moody’s Investors Service, a sister company to Moody’s Analytics, sets Illinois unfunded pension liability as of last June 30 at $317 billion, up 19 percent from previous year, driven largely by falling interest rates. That’s the highest in the country and amounts to 37 percent of Illinois’ annual economic output, the bond-rating firm says.
Illinois’ Long-Term Debt Skyrockets to Over $300 Billion
Illinois’ long-term debt has passed a grim milestone. Rating firm Moody’s Investors Service announced that Illinois’ adjusted net pension liabilities (ANPL) spiked 19% in 2020 to $317 billion. The figure was $261 billion in 2019.
“The new liability is based on the aggregate ANPL of Illinois’ five pension systems, which reached $317 billion as of June 30 last year, a 19% jump from the prior year that was driven largely by falling interest rates,” the report read. Distributed evenly across Illinois’ approximately 12 million residents, that amounts to roughly $25,000 per person.
The state uses a different method to estimate its level of unfunded liability, most recently putting the figure at $144 billion. Even with the more optimistic estimation, the state doesn’t contribute to the five funds at the level in which they would lower the amount of debt. That’s referred to as the actuarially required contribution, or ARC. Instead, Illinois lawmakers passed legislation to backload their funding payments, paying less than the ARC in recent years with plans to escalate contributions years down the road. Still, annual payments reflect around a quarter of the state budget.
Moody’s goes on to compare Illinois to other states, saying “Illinois’ pension liabilities are the highest among the 50 states, and the state’s liabilities and fixed costs for pensions, debt service and retiree healthcare (or OPEB) are at or near the top by almost any measure.” In addition to falling interest rates, Moody’s also blames lower returns on pension fund investments for the growing shortfall. “To a smaller degree, weaker-than-assumed investment performance constrained pension plans’ asset accumulation and also contributed to unfunded liability growth,” they said. “The state’s largest pension system, the Teachers’ Retirement System (TRS), reported an investment return of 0.52%, well below its 7% target, for the period.”
Ballooning pension debt is seen as a red flag for the business industry since states have a higher chance of hiking taxes to help pay for the increasing costs. “I’ll be here for the life of the pension plan and they will come after corporations, they’ll come after individuals,” billionaire business investor Warren Buffett said in 2019 when calling out Illinois’ fiscal situation. “They’re going to have to raise a lot of money.”
Coalition Letter on Extension of the Paycheck Protection Program Deadline
The U.S. Chamber of Commerce has sent a letter that our chamber has signed onto asking for the extension of the PPP deadline to the end of the year rather than here at the end of March. You can read the letter below and/or click here for the full version with the full list of supporting organizations.
Dear Leader Schumer, Leader McConnell, Chairman Cardin, and Ranking Member Paul:
The undersigned organizations, representing millions of American small businesses, urge extension of the deadline for the Paycheck Protection Program (PPP) through December 31, 2021.
Congress created the PPP through passage of the bipartisan Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and in the past 12 months more than 5 million small businesses received PPP loans. That aid allowed between 1.4 and 3.2 million employees to stay on payroll even when their employers were forced to close their doors. Despite the breadth of this emergency aid, small businesses continue to struggle, especially minority-owned businesses. Survey data show that 66% of minority-owned small businesses fear permanent closure due to the pandemic compared to 57% of non-minority-owned firms. The same report shows that minorities have a harder time accessing the capital needed to keep their businesses open. More recent data show neighborhoods with a higher concentration of minority-owned businesses are experiencing higher business closure rates (36%) compared to businesses in non-minority communities (22%).
Legislation enacted last December helped target aid to small businesses that need help the most and the American Rescue Plan passed by the U.S. House of Representatives last week goes even further by providing targeted aid for the restaurant industry and for shuttered venues, and by directing outreach and assistance to entrepreneurs in communities where minority-owned businesses are struggling.
All these steps, including President Biden’s two-week initiative focusing PPP aid towards businesses with fewer than 20 employees, need additional time for them to actually produce the desired result. Extending the PPP deadline through the end of this year will ensure that the segment of small businesses facing the greatest obstacles do not get left behind.
We continue to need your help to ensure that Main Street emerges from the COVID-19 pandemic in a position of strength that bolsters America’s recovery. Thank you for considering our views and please do not hesitate to contact any of the signatories if you have questions about the content of this letter.
Federal Rules End Extended Unemployment Benefits for Self-Employed
Because Illinois’ unemployment rate has dropped, federal rules now prohibit individuals from seeking seven additional weeks of Pandemic Unemployment Assistance (PUA), a new federal effort to cover individuals who did not qualify for regular unemployment and which largely covers those who are self-employed.
“This is precisely why I’ve encouraged Congress to set out long-term rules that help the people most hurt by this pandemic, and why it’s imperative that they pass something immediately that corrects this gap,” Governor Pritzker said. “Our federal leaders must come together around a solution, and we will be ready to help people get the benefits they need to get through this pandemic.”
According to unemployment data published by the federal government, Illinois’ unemployment rate is now below the threshold for the state’s High Unemployment Period (HUP) to be active, and individuals no longer qualify for additional weeks of benefits provided during HUP. Under federal law, when a state is in the HUP, there are seven additional weeks added to PUA eligibility, as well as seven additional weeks added to Extended Benefits (EB) eligibility under state law. As a result of Illinois’ unemployment rate dropping, under state and federal law, the seven additional weeks for both programs are no longer available.
The maximum number of weeks available to PUA claimants has reduced from 57 weeks to 50 weeks. Additionally, extended benefits (EB) for regular state unemployment insurance benefits reduced from 20 weeks to 13 weeks. Federal law provides regular unemployment insurance benefit recipients with a transition to added weeks of Pandemic Emergency Unemployment Compensation (PEUC) benefits but is currently silent with regard to extra assistance for PUA claimants.
PUA claimants who have exhausted the 50th week or more have been, or will be, notified they will have reached the maximum number of weeks allowable under federal law. Barring additional federal action or extensions to federal unemployment programs, PUA claimants who have exhausted the maximum number of weeks will no longer be eligible to collect unemployment insurance benefits.
The Department is closely monitoring any action from the federal government to extend PUA benefits, in addition to the other federal unemployment benefits programs, set to expire on March 13, 2021. As was done with the CARES Act and the Continued Assistance Act, IDES will publicly provide individuals with programmatic updates, changes, and information pertaining to unemployment programs as they are made available by the federal government and the U.S. Department of Labor.
Those with questions or in need of assistance with unemployment benefits at this time are encouraged to visit IDES.Illinois.gov.
Program Notices & Reminders
SBA Page Links for Direction and Questions on PPP
Webinar Series: PPP Updates for Your Small Business
The Small Business Administration has some key changes to the Paycheck Protection Program (PPP) which will be available for a limited amount of time to ensure America’s smallest businesses get exclusive access. If you are a small business owner with 20 employees or less or are self-employed; there is new information for you. Please join a series of webinars hosted by the U.S. Small Business Administration, Public Private Strategies Institute, & other stakeholders to hear about:
- What steps you can take now to take advantage of this special opportunity, which closes at 5:00 P.M. EST, Tuesday, March 9th, 2021.
- Additional changes and recent policy announcements made by Biden-Harris Administration
- Have your questions answered by SBA Leadership
Mar. 5, 1:00 p.m. ET, Black + African-American Small Business Owners, Click here to register.
Mar. 5, 3:00 p.m. ET, Hispanic Small Business Owners, Click here to register.
Mar. 6, 2:00 p.m. ET, Veterans, Self-Employed Business Owners, Click here to register.
Mar. 8, 3:00 p.m. ET, LGTBQ Business Owners, Youth Entrepreneurs, Restaurant Owners, Click here to register.
1st draw info: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/first-draw-ppp-loans
First draw app: https://www.sba.gov/document/sba-form-2483-paycheck-protection-program-borrower-application-form?utm_medium=email&utm_source=govdelivery
2nd draw info: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/second-draw-ppp-loans
Second draw app: https://www.sba.gov/document/sba-form-2483-sd-ppp-second-draw-borrower-application-form?utm_medium=email&utm_source=govdelivery
A Chance to Win $50,000 for Your Small Business – FedEx Grant Contest
The 2021 FedEx Small Business Grant Contest is now open. Entries close March 9, 2021. Before you enter, have your FedEx account number handy. Or create an account if you don’t have one. Now you have a chance to win $50,000 to help you continue growing your business. Enter the 9th annual FedEx Small Business Grant Contest today.
Enter here: https://smallbusinessgrant.fedex.com/enter-now
More info: https://www.fedex.com/en-us/small-business/grant-contest.html?CMP=SOC-1006521-1-16-1003-1111000-US-US-EN-FXALISBGCKIT200&LINK=LEARNGCLI315120
Finally, March is shaping up to be a busy month on the chamber calendar. Please add the Women’s Empowerment Forum on Wednesday, March 24th. In honor of National Women’s History month the chamber has partnered with Lewis University and invites you to join an interactive, virtual, open forum with women educators and leaders from our community.
Panel to include:
Dr. Karen Trimble Alliaume, Director, Women Studies Programs, Lewis University
Dr. Kristi Kelly, Vice President of Diversity, Lewis University
Ms. Ruth Colby, President & CEO, Silver Cross Hospital
Ms. Monica Mainland, Joliet Refinery Manager, ExxonMobil
Moderated by Jen Howard, President, Joliet Chamber
Join us at 2:30 PM by registering here: http://jolietchamber.chambermaster.com/events/details/2021-webinar-march-24th-women-s-empowerment-forum-6018
Joliet Region Chamber of Commerce & Industry Staff and Board of Directors
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry