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MikeH / September 15, 2005 11:19 AM

I wouldn't say it's GREAT...

but on the other hand, tourism is significantly up and we seem to be holding our own much better than many other large cities...

Andrew / September 15, 2005 11:34 AM

(Question courtesy of Ian -- thanks!)

I'd say we're neither boom nor bust at the moment, but it could go either way. There seems to be an equilibrium of businesses laying people off and those hiring, but I can't tell whether it's a zero sum.

Ian / September 15, 2005 11:39 AM

I say Boom. Here’s why:

My economic indicators are the growth of non-essential services and products. Look the recent food services openings in Chicago: Cupcakes, Cereality? Both of these outlets are based on very non-essential purchases, which indicate customers with solid levels of disposable income (or credit – see below). Also take a look at Rotofugi, a must stop location for all your designer toy needs. When places like this can survive, I think it says we are doing OK folks! Don’t get me wrong, I love some of these places like everybody else, but could I survive without them? Of course!

So we all have cash hanging out of our pockets in Chicago? Not quite. I feel much of this economic ‘confidence’ is fueled using cheap credit and backed by currently solid property value growth. Everyone feels good when their biggest asset gains value.

What about Chicago’s less fortunate? They’re obviously gaining from these good times? Well of course, as we all know, capitalisms much lauded ‘trickle down’ effect has been very successful at the redistribution of wealth to all…..

j / September 15, 2005 12:06 PM

For which Chicago?

Certainly there is a segment of the population who is experiencing tremendous growth and prosperity. Yet there is a much larger and less acknowleged population whi has been systematically left out of the economic growth of the past years. Call it contrived, call it hegemony, call it what you will but this is a fact. And aren't we only as strong as the weakest among us? If that's the measure then one could venture to say that outside the shining spotlight of the public image of prosperity the city is starving.

Perhaps it's time we look to fostering a tangible method for transfering the economic growth and prosperity to ALL residents of the city.

Baltimore / September 15, 2005 12:57 PM

Grrrrrreeaaaat!
Lets see were hemorgeing Chicago businesses, Ameritech, Amoco, Illinois Central, Santa Fe, Marshall Field's, Continental Bank, Inland Steel, Morton International, Bank One,( the last of the major banks here) all spirited away- with all those decent paying jobs of course- in the global merger sweepstakes. The only jobs that we are producing are service sector jobs, so the next generation can work as wait staff for the 3% of the population that will control 98 percent of the wealth. We have a whole corrupt city hall industry where Da Mayor installs expensive technology so thousands of city election workers can use electronic hand prints to swipe in and out of their "jobs", to make sure they actually show up in the mornings, as if they will be more productive there. Add this to our actuality deteriorating schools( forget what the well paid CPS public relations machine is telling you (talk to any teacher) where even at the "middle class" schools, students bring guns to school for protection and use them on other kids, and the police at first lie on T.V,( while standing infront of the school) saying the shooting happen a mile away, to protect the image of CPS. A corrupted CHA( check out the better Government Association Report) tearing down the projects( contracts for the Daley cronies) with no housing available as in a 8 year waiting list for section 8 housing, yet we are so ready to take victims from New Orleans. Oh that's right we got that great park with the bean for free! Now least I forget 30,000 prisoners coming home next summer(annnually) with no jobs and out on the street until the 86 percent commit another crime and go right back in. Then take a bunch of reality t.v,addicted sex in the city wanna be, support our opps, sports/self addicted, non reading or Red Eye reading white folks combine with poor equally sports addicted, store front church or mega church religious indoctrinated adults of color with their hooked on Bling Bling Nike, BMW, BET, etc, etc, kids attending the CPS and give this entire population all credit cards and three year interests only then adjustable mortgages and of course make them feel that they are part of the best country in the world, and don't need to read any thing yup every thing is great here in Chicago, yes sir re, how bout them cubs! or then bears! I'm just waiting for the bread, cause we already got plenty of circuses

Brian / September 15, 2005 1:10 PM

What about the sox?? Why is is no one realizes tere is first place baseball being played here!

bam / September 15, 2005 2:30 PM

Not too hot, not too cool, for now. Was booming for a while there...and we built a glut of cinder block condos in hopes of flipping 'em to the next sucker. Of course we got the bean too, a little late and a bit overbudget.

Doesn't look like the futures so bright we'll need shades. As stated above, most of the recent good times are based on cheap credit offers, 110% LTV cash-out refi's, and low priced oil. Now if we were investing during the boom times on long term infrastructure improvements or conservation efforts I'd be okay with things, but we seem to be sacrificing the future for the present, and a pretty shiny hollow present at that. Oil production has likely peaked, demand has not, and alternative sources seem limited. High energy prices might not burst the bubble, but they will suck a lot of the air out. Prepare to ride out the long emergency. Candide's always been right -- focus on cultivating the garden.

e_five / September 15, 2005 2:49 PM

I would say it's not good.

There is a real estate bubble that may burst soon as a result of the economic fallout of the hurricane.

Gas prices are as high as they've ever been, even considering inflation.

Look for less help from the federal government, too, as it attempts to cut taxes, wage a war in Iraq, and rebuild the Gulf Coast at the same time.

Jeigh / September 15, 2005 3:01 PM

You mean we have our own seperate economy? Well I'll be dipped. Uh... How the hell am I supposed to know the answer to this? I know that a LOT more people live here than fifteen years ago, real estate is huge. I suppose it depends on your definition of boom, and what your definition of "is" is...

Moon / September 15, 2005 4:24 PM

"What about the sox?? Why is is no one realizes tere is first place baseball being played here!"

That says a lot about disposable income. The Sox have been in first place since the start of the season and yet, there were only 17,000 fans at the last home game I saw attendance figure for.

Allan / September 15, 2005 4:37 PM

I have always been a boom man. Where else can I stick my zoom zoom.

That said "bust or "boom" don't these things only effect the "middle class". I doubt the very wealthy or the very poor are affected either way. Any comments?

Steve / September 15, 2005 5:32 PM

I've been somewhat affected by Chicago's economic ups and downs myself the past few months.

I was laid off recently by a company that obstensibly has its HQ here (the parent company is located elsewhere, but the parents is desperately seeking a sale of the "child") due to steadily dwindling business (revenues last year were just over half of 2000 revenues -- can you say "death spiral"?).

Now I'm a freelance commercial writer, and doing okay two and a half months in (at least considering that I haven't gotten off my rump to do any marketing yet). My biggest client is HQed here, but losing money. Another client is a startup that will be launching here soon, then plans to expand into other markets. A third client is a newish company that is actually incorporated in the Caribbean, like all the kool kidz. And, uh, I proofread a brochure for a local family-owned retail outlet last night too.

So yeah, we were talkin' about the Chicago economy. I guess it's distressing that we keep losing locally owned businesses due to HQ moves and merger activity, but encouraging that new companies keep popping up all over the place.

I'm not sure about Ian's point with ultra-niche retail/food outlets -- I would guess that their relative success has as much to do with our population density more than anything else. When there's a Cupcakes and a Cereality next to the Starbuck's and Chipotle we find in every suburb, then we'll have a sign that people have oodles of disposable income.

elena / September 15, 2005 5:39 PM

I think that the very poor are affected when the economy takes a dip. Businesses may start cutting workers' hours or doing without services (cleaning, deliveries) that provided poorer employees with necessary income. If you're homeless, you may find that shelters fill up faster and the supply of donated food and clothes is spread more thinly.

My observation on the current local conditions: at the food pantry where I volunteer, we've seen a rise (larger than usual for the season -- and this was before Katrina) in the number of people needing food. When times are bad, businesses often cut their charitable contributions, and the people who are just getting by with the help of the pantry may get less. That hasn't happened, though. I don't have enough information to draw any larger conclusions.

As for the real estate question, I wonder about the effect of the real estate market will be on very poor people living in hotels in "up and coming" parts of town. Will the building owners sell, and if they do, where will people go?

If things ever get so good that the pantry stops needing donations volunteers, I'll let you know.

Moon / September 15, 2005 8:14 PM

Well said, elena. The only people that aren't affected by a downturn are the wealthy. That's why people are saying Bush doesn't care. His "base" is having a literal gold rush, with tax cuts, dividend cuts, estate tax cuts, etc.

Ralphie / September 15, 2005 8:29 PM

Man, if I had a beer for every time I hear the phrase "real estate bubble" uttered by someone who couldn't explain what they mean when questioned, I'd be...well, really fucking drunk.

MikeH / September 16, 2005 8:36 AM

The concept of a "real estate bubble" isn't too difficult to figure out. All one has to do is recall the "dot.com bubble" of the late nineties. Those stocks were over-valued then, just as your real estate is right now. Amateur real estate speculators hoping to flip condos for a quick buck only serve to further artificially inflate the housing market. When demand dries up, as it inevitably will, values will plummet...

Ralphie / September 16, 2005 8:51 AM

Woop, here comes another beer!

Well, I suppose I should have qualified myself. If I had a beer for every time I heard it, and the person could explain it where it's true. Those stocks were over-valued because people were throwing money at companies that had never...say...done any business or made any money. They were over-valued because the earnings expectations were far higher than the revenue that the firms were actually able to generate. Of course, there's more to it than that, but I hardly feel that saying the "real estate bubble" and the "dot-com bubble" are exactly the same sort of thing. For example, when your stock was over-valued and becomes worthless, you have nothing. If your property devalues, but you can still make payments, and you don't sell in a panic, you still have your property.

Alec / September 16, 2005 9:30 AM

Well, I hope it bursts soon, cuz then I'm finally gonna buy a place. ;P

mike / September 16, 2005 10:01 AM

Alec, people said the same thing five years ago. Good luck. If you can afford a place now, and you want to live there for at least five years you should buy one. It won't increase in value 10% a year, but it's not likely that you'll lose money on it.

bam / September 16, 2005 10:05 AM

Boston, San Fran, and Dallas in the mid 80s = Bubbles were burst. London, Sydney, Melbourne, Amsterdam = bubbles are showing early signs of bursting.

It's indeed true that a bursting bubble need not displace owners who live in the property, and can afford to make payments inspite of the flattening of the price growth curve. It's also true that some of those dot com busts are still alive and kicking after getting 99% of their values chopped in the early part of century. So maybe the two bubbles are similar, maybe not, hindsight will reveal it for what it is.

But what of those who are into more speculative real estate investments? It's been mentioned recently in the WSJ that 30% of the new condos in River North and Streetervile sit vacant held by speculators waiting to be flipped. Like the dot com bubble these 'investors' are paying based on expecatation that they'll be able to sell it for yet more than they've paid. Ride the momentum. It was a sellers market, and it's now a buyers market. And if these 'investors' can't sell for prices that meet they're profit targets, they've either got to sell or rent. If you've got solid cash flow no problem, rent at a loss and wait for the big IRS refund. Elsewise you sell, and when you're bleeding cash you're apt to sell at a loss to get out. and if enough people are doing it the bubble bursts.

See tomorrow's Economist for a nice overview of the bubble...which has already started deflating in the Netherlands, UK and Australia ..."In America this could mean the first fall in average house prices since the Great Depression." "A study by the IMF found that output losses after house-price busts in rich countries have, on average, been twice as large as those after stockmarket crashes, and usually result in a recession."

All those ReFi's don't kick out so much cash, and Best Buy sells fewer Plasmas, and Perillo fewer x5's, and we don't pay others to pour milk on overpriced bowls of cereal and so it goes.

cynthia / September 16, 2005 11:05 AM

I would say that if you aren't in the real estate business and save a few other choice professions, things are sort of at a standstill. It doesn't seem the economy is getting worse (for now, Katrina's full effect remains to be seen) but they aren't getting better either. In the advertising industry, people have gotten paltry raises over the past few years, barely enough to compete with inflation but at the same time glad to have insurance and employed at all so it is a double edged sword.

Getting Bush out of office will probably help. :) Can I give a shout out to Clinton? We were in the black. Yes people! No national debt. And now, I don't even want to think about it. That and gas prices and dependence, natural gas prices, global warming, oceanic pollution and landfills. But I think I am getting off subject. sigh.

Rich / September 17, 2005 1:19 PM

As for a tech economy goes, I would call it "stabilzed" but not great. I am considering leaving Chicago sadly after 26 years because of the loss of tech jobs mostly
due to Lucent and Motorola layoff's and lack of re-hiring since the tech bubble burst.
I have made good advances in my real estate value, but find if I get a direct tech job I cannot afford to live in the home I currently own. sad but true. Real estate has gone up in Chicago but wages have stayed the same or declined. I believe both political parties suck and we need real change for the middle class ( 3rd party candidates) In the mean time I will probably be finding cheaper housing in the Southwest.
I love this city so much, but I must face a financial reality.

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