Economic Update For Illinois' Metropolitan Areas:
Fourth Quarter 1993

By JOHN B. CRIHFIELD and MIGUEL GOMEZ*
University of Illinois — Institute of Government Affairs

The U.S. Department of Commerce reported a revised estimate of 7.5% growth in the nation's Gross Domestic Product during the fourth quarter. Fears of torrid growth led the Federal Reserve to tighten short-term credit and thereby raise short-term interest rates. But using retail spending in Illinois as a guide, fourth quarter growth was hardly blistering. Inflation-adjusted retail sales grew 1.3% in the fourth quarter compared to the same period a year ago, and down from 3.1% in the third quarter. To be sure, 1992's fourth quarter was a doozy, with growth at an annual rate of over 10 percent. The 1.3% growth in the October-to-December period of 1993 took off from an already substantial base.

Results from around the state fit a familiar pattern. The strongest growth resided in the collar counties around Chicago. Leading the way was Aurora-Elgin (7.1%), followed by Lake County (6.6%). Other metropolitan areas (in order) are as follows: Rockford (6.3%), Springfield (5.9%), Joliet (5.3%), Champaign-Urbana-Rantoul (4.9%), Davenport-Rock Island-Moline (3.5%), Kankakee (3.4%), rural Illinois (2.1%), Peoria (1.2%), the Illinois portion of St. Louis (0.2%), Chicago (-0.1%), Bloomington-Normal (-2.5%), and Decatur (-5.5%). Results for all metropolitan areas are shown in the accompanying table.

For the state overall, the strongest sectors were automobile sales and construction purchases. Aurora-Elgin and Joliet continued to cash in on their riverboats. However, for the first time in two years, there was no growth in DuPage County. Results for Decatur continued to behave erratically, and for the third time in six quarters it reported the weakest growth among all metropolitan areas in Illinois.

For the first time we report the likely outcomes of changes in Illinois sales tax policy. Currently, the state does not tax sales of drugs or food purchased for home consumption. A 5% state sales tax on these items would generate annual revenues of roughly $80 million and $554 million, respectively. A one percentage point increase in the sales tax rate (from 5 to 6 percent on the current sales tax base) would generate about $921 million annually.

Our work is based on data from all establishments that report tax obligations to the Illinois Department of Revenue. Our analysis creates reports for 1850 towns, villages, and cities in Illinois. •

Economic Activity in Illinois by Metropolitan Area: 1992 Qrt. 4 -1993 Qrt. 4
				Percentage
Metropolitan area	-Total Retail Spending-			Change in	Local Sales
	1992 Qrt. 4		1993 Qrt. 4	Total Spending	Tax Receipts
Illinois	25,850,728,571		26,199,240,176	1.3	261,992,402
Aurora-Elgin PMSA	843,910,636		903,546,475	7.1	9,035,465
Bloomington-Normal MSA	378,846,897		369,338,436	-2.5	3,693,384
Champaign-Urbana-Rantoul MSA	382,641,221		401,263,043	4.9	4,012,630
Chicago PMSA	14,495,515,512		14,577,380,460	-0.1	145,773,805
Davenport-Rock Island-Moline MSA	395,652,142		409,547,437	3.5	4,095,474
Decatur MSA	310,915,067		293,879,740	-5.5	2,938,797
Joliet PMSA	755,803,104		795,917,310	5.3	7,959,173
Kankakee MSA	205,854,700		212,899,922	3.4	2,128,999
Lake County PMSA	1,444,549,167		1,539,448,429	6.6	15,394,484
Peoria MSA	803,805,953		813,646,279	1.2	8,136,463
Rockford MSA	707,733,458		752,330,313	6.3	7,523,303
Rural Counties	3,411,773,983		3,484,514,193	2.1	34,845,142
Springfield MSA	498,684,304		527,983,490	5.9	5,279,835
St. Louis MSA (Ill. part)	1,115,042,428		1,117,544,648	0.2	11,175,446
Notes:	Dollar values are for the fourth quarter (October, November, December) and are in December 1993 dollars. Data are from the Illinois Department of Revenue. Analysis is by the Institute of Government and Public Affairs, University of Illinois.

April 1994 / Illinois Municipal Review / Page 23