Economic recovery in the Quad-Cities region continued but was uneven in the first quarter of 2021 as COVID-19 mitigation measures continued and mass vaccinations started, according to a new report.
The Quad Cities Chamber on Wednesday issued its latest quarterly market report, summarizing trends and economic activity witnessed within the region’s business sectors for the first quarter of 2021.
"Major sectors of the economy remain at least partially shutdown, and many regions still are struggling with virus outbreaks and to get their populations vaccinated," Kenneth Kriz, an economics professor at the University of Illinois-Springfield, wrote in a summary included in the report.
Regionally, service industry growth became flat at the end of 2020 and did not recover significantly in the first three months of 2021, per the report. And until the industry is free to grow again, the region will continue to be challenged in terms of its growth prospects, per the chamber.
Retail sales increased with heightened consumer confidence with the availability of the COVID-19 vaccine, leading to some people returning to stores instead of relying on online shopping or curbside pickup.
Job growth continued to stagnate in the Quad-Cities metro area, growing by 1% from December to March, according to the market report. A nationwide and regional labor shortage cut into business profits across all industries, spurring companies to evaluate and invest in more automation, the report states.
Iowa's unemployment rate fell to 3.7% in March, within 1% of where it was before COVID. In Illinois, the jobless rate fell to 7.1% in March, more than three percentage points higher than it was a year ago. Meanwhile, unemployment rose unexpectedly in the Quad-Cities in the first quarter of the year to 5.9% in March compared with 5.3% in December.
Manufacturing continued to recover from its decline during the early months of the pandemic. Shipping container shortages and limited air freight capacity, however, continued to disrupt supply chains, causing delays and leading to higher shipping costs for both manufacturers and consumers, according to the chamber.
While still unclear what the future holds for the corporate office sector, regional companies will more than likely lean more toward a hybrid version of in-person and remote working environments.
"As we move into the second quarter of 2021, there appears to be more hope of reopening the economy and hope that successive rounds of federal fiscal stimulus will bode well for economic growth," Kriz wrote. "Many uncertainties remain, however. Concerns over vaccine hesitancy and the transmission of SARS-CoV2 variants have kept down growth expectations."
Raw materials and labor shortages, combined with the prospect of higher inflation — a result of too much money chasing too few goods — sparked by unprecedented infusion of large amounts of cash to the economy from federal stimulus packages means "the economy faces a significant 'wall of worry' to climb," Kriz wrote.