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Economy brings uncertainty to Illinoisans
PEORIA, Ill. -- Things were finally clicking for David Jenkins. He had switched to days after 10 years on the graveyard shift. He was operating computers for a national mail-order company, a job with decent pay, health benefits and an employee stock-option plan.
Then one day Jenkins' supervisor at Foster & Gallagher Inc. called the employees into a conference room. Here's your paycheck -- the last one, he said. The company is going out of business today. You've got 15 minutes to clear out. Sorry and good-bye.
Suddenly Jenkins had joined the ranks of the unemployed, a steadily growing group in Illinois.
His health insurance is gone, which may leave him stuck with a $6,000 bill for his wife's recent surgery. His stock options are worthless, leaving him without a retirement fund. His training on the company's mainframe is of limited use when businesses are focusing on desktop computers.
"There are times when I get very discouraged and depressed and frustrated," says Jenkins, a slender, soft-spoken 46-year-old. "It's like starting over from the beginning."
Many others are starting over, too.
Illinois' unemployment rate hit 5.5 percent in September, up from an all-time low of 3.9 percent in October 2000. Fewer than 254,000 Illinoisans were unemployed then, compared to 351,000 in the most recent report.
Experts say the Sept. 11 terrorist attacks have pushed Illinois and the nation into recession. Manufacturing jobs were already disappearing, and now problems have spread to airlines, hotels and other service industries. Consumer confidence has fallen just before the holiday shopping season, all-important for many stores.
Rebirth by spring
The good news, however, is that experts foresee the economy beginning to grow again by spring. And there are some reasons to think Illinois will not suffer as much as other parts of the country.
"It looks like we're well-positioned to be one of the first states to come out of it," said Diane Swonk, chief economist for Chicago-based Bank One Corp.
For one thing, Illinois was in a slump even before the terrorist attacks. The national unemployment rate just jumped from 4.9 percent to 5.4 percent in October. Illinois unemployment has been in that range for months, as Jenkins and many others know too well.
Jenkins has been out of work for four months, depending on unemployment benefits and his wife's two part-time jobs. His benefits end just after Christmas, putting him in an even more precarious situation.
But the layoffs Illinois already has seen may mean that businesses won't need more deep cuts to ride out the recession.
The Illinois economy does not depend heavily on some industries that will suffer the most from the terrorist attacks, economists said.
Airplane manufacturing faces tough times, for instance, but that should not harm Illinois significantly. Tourism is important to Chicago but not as important as in Florida or California; moreover, Chicago could see some tourism benefits from conventions switching away from New York and Washington, or families staying in the area instead of flying to Disney World.
"It's not going to be a total loss," said J. Fred Giertz, a University of Illinois economics professor who monitors the state's economic health.
Illinois also is strong in some industries that are holding up relatively well. Auto sales, for instance, have been boosted by zero-percent financing offers, and Illinois is a big supplier of parts for the auto industry.
Home construction has not collapsed in Illinois, and federal interest-rate cuts should keep it going. Swonk argues the rate cuts are also especially helpful to the Chicago area, where high home values should let people pay off debts or get extra cash by refinancing their mortgages.
One of the biggest questions now is whether consumers will feel confident enough to go out and spend money.
Edward Boss Jr., chief economist for the Legislature's Economic and Fiscal Commission, believes they will. Interest-rate cuts and the economic stimulus package being debated in Washington should help restore consumer confidence -- which, he said, has fallen but not nearly as far as it did during the last major recession.
"Just as it turned around very quickly on the negative side after Sept. 11, I think it could turn around just as quickly on the positive side," Boss said.
But none of this means Illinois' troubles are over.
Boss and other economists predict the state's unemployment rate will continue to climb, although slowly. State tax revenues are down, which may require further cuts in government services and perhaps jobs. Post-terrorism woes probably will continue for United Airlines and other travel-related Illinois companies.
That means more people will be joining David Jenkins as he pinches pennies and searches the want ads. More people will weigh the importance of every cross-town errand against the gasoline money it will cost or will worry about how to afford training in a new line of work when they cannot find a job in their old field.
"That's a terrible situation to see your husband in," Helen Jenkins said. "We pray about things, but the Lord may not answer until the eleventh hour. We have to trust in that."