Scharlau sees 'slow recovery'
CHAMPAIGN -- The economic downturn likely "bottomed out" during the second quarter of 2010, and since then, Champaign County has seen signs of improvement, such as an increase in retail sales and a slight decline in the unemployment rate.
"We are in what you would probably call a 'slow recovery,'" said Ed Scharlau, vice chairman of First Busey Corporation.
Scharlau was scheduled to deliver his annual seminar on the Champaign County economy Thursday morning in the Assembly Hall. It was titled, "Our abundant community: Creating a vibrant life in Champaign County" and inspired by the book "The Abundant Community" by John McKnight and Peter Block. Scharlau has been giving economic addresses in Champaign since 1975.
Scharlau provided an advance copy of his remarks to The News-Gazette.
A vibrant community, he said, is not built by corporations, but by people doing things, such as starting festivals, enhancing parks, creating programs that benefit schools.
"Take the marathon. That's a great example of something that has made our community more vibrant," Scharlau said. "That was organized by a group of people who wanted to start a marathon here."
Before releasing regional figures with the audience of local politicians, University of Illinois and Parkland College officials, bank customers and more, he reviewed national economic surveys and data such as the National Association for Business Economics survey that found most of the economists surveyed expect the U.S. economy to grow at least 2 percent in 2011.
"Hopefully the economists are right and we will see moderate growth in 2011," Scharlau said. "We're going to see the slow progress developing this year."
UI payroll down, health care up
For the first time since he began the seminars, Scharlau said, the University of Illinois payroll declined.
UI payroll declined from $906 million to $894 million in 2010. He attributed that drop to employees taking furlough days. As for 2011, Scharlau estimates the university payroll will be around $898 million.
After the university, the largest employer in the county is the health care industry, including Carle, Provena Covenant Medical Center, Christie Clinic, Health Alliance, Personal Care and Stratum Med.
Payrolls in that sector continue to increase. In 2010, they were $484 million, up from $460 million in 2009. Scharlau's estimate for 2011 is $500 million.
Education employs 14,633 employees in the area, followed by 7,786 employees in health care and 4,120 employees in manufacturing. After the UI (with 11,676 full-time employees) and Carle (with 5,668), the largest employer in the area is Champaign Unit 4 School District with 1,351 full-time employees, followed by Kraft Foods with 1,300. Parkland College has 1,300 full-time employees.
The good news about employment in the area is that the rate is lower than last year, but the February 2011 8.3 percent rate for Champaign County is still well above the 3.5 percent from a decade ago.
"The bad news is there are still several unemployed or underemployed in Champaign County," he said, which reinforces the importance of local groups working to help those in need.
Retail sales took a beating in 2009, but they are on their way back up, Scharlau said.
In 2009, retail sales were down 6 percent to $2.376 billion. In 2010, they were up 3 percent to $2.447 billion, and Scharlau predicts retail sales will increase to $2.5 billion in 2011, up another 3 percent.
"We can see a turnaround coming when we look at retail sales," he said.
Consider: In the second quarter of 2010, retail sales in the county rose 1.2 percent. In the third quarter of 2010, they were up by 2.6 percent and up by 4.4 percent in the fourth quarter of 2010.
Categories that saw increases in 2010 were automobiles and gas stations (up 12 percent), general merchandise (up 5.2 percent) and food (up 1.8 percent).
In home sales, the number of homes and condos sold in Champaign County and some surrounding areas was down 11 percent, or 267, to 2,207 in 2010 from 2,474 in 2009. The value of the homes and condos sold was $327 million, down from $367 million in 2009. Scharlau does anticipate the total value of homes sold to rebound to an estimated $340 million this year.
For the first three months of this year, there were 393 homes sold in Champaign County, up 17 from the same period last year. Compare that to McLean County, he said, where 79 fewer homes were sold.
Bright ag outlook
Farmers and agriculture-related businesses in Champaign County had a banner year in 2010. And Scharlau predicts this coming year will also be a good one.
Cash receipts, including government payments, were estimated to reach $481 million in 2010, up from $351 million in 2009.
"This will be the best year ever for agriculture assuming the weather cooperates and prices stay high."
An annual tradition of the seminar is to survey audience members and ask for their predictions on how several economic indicators will finish at the end of the year. The audience predicted the rate of inflation will increase to 2.5 percent and the 6-month Treasury bill rate will be 0.3 percent. The Dow Jones Industrial Average will end 2011 at 12,621, according to audience guesses, and retail sales in Champaign County will reach $2.5 billion, they predicted. As for home sales, the audience guessed 243 new single-family homes will be built in Champaign County in 2011.