SPRINGFIELD, Ill. — Illinois’ economy could contract by nearly $10 billion each year due to federal cuts enacted under President Donald Trump, according to a report released Monday by the Illinois Economic Policy Institute. The labor-affiliated think tank found that changes implemented through executive orders, legislation, agency directives, and Elon Musk’s short-lived “Department of Government Efficiency” will reduce jobs, state revenues, and economic activity across multiple sectors.
Researchers Frank Manzo and Robert Bruno estimate that by 2029, Illinois’ annual GDP will fall by $9.6 billion, with state revenues dropping $540 million below previous projections and 86,000 jobs lost. They warned state and local governments cannot offset losses through spending cuts alone, urging lawmakers to consider new revenue sources.
One of the largest impacts stems from Trump’s One Big Beautiful Bill Act, which tightens Medicaid and SNAP eligibility and ends Affordable Care Act tax credits. The changes are projected to reduce Illinois GDP by $5.8 billion and eliminate 49,000 jobs. Medicaid work requirements alone could cause hundreds of thousands to lose coverage, triggering a $4 billion annual decline in economic activity.
Cuts to clean energy credits and Chicago-area transit projects could also strain the state’s robust trades workforce, with the Red Line Extension and Purple Line modernization now frozen. Additionally, DOGE-related cuts are expected to reduce GDP by $1.4 billion, affecting public health and education funding.
State agencies further report rising costs from tariffs, with Illinois households facing an estimated $3,400 in added annual expenses and unemployment claims up 16 percent.
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Sources:
• News From the States – MBFC Rating
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