The Chicago region is home to a diverse economy in which no single industry dominates. Tracking the region's overall productivity, employment levels, and personal income provides insight into the resiliency of the region's economy and the well-being of its residents.
Real Median Household Income
The income of the 50th percentile of households in Chicago and peer metropolitan statistical areas (MSAs), in 2014 dollars.
Why it matters
The estimated median household income in the Chicago MSA was $61,598 in 2014 -- higher than the estimated national median household income of $53,657. Since 1989, real median household income has declined by 7.2 percent in the region and 6.5 percent nationwide. Among peer metropolitan areas, real median household income has also fallen in Boston and Los Angeles while increasing in New York City and staying the same in Washington, D.C.
Trends in Median Household Income
Real median household income is a common measure of the well-being of a region's middle class. The statistic measures the reported earnings of an average household in the 50th percentile of all households in a region. Adjusting household income for inflation allows for the comparison of the well-being of the average household across time. Higher median household incomes generally indicate prosperous economies and more disposable income for residents to spend. As median household income rises, residents are considered better off.
Household income data have been collected on an annual basis since 2005 via the U.S. Census Bureau's American Community Survey. Prior to 2005, median household income data were collected every ten years through the decennial census.
In 1989, real median household income in the Chicago metropolitan area was $66,360 and $57,373 nationally. Between 1989-99, household income increased both in Chicago and nationwide. Today, median household incomes are lower than in 1989. As of 2014, median household income in the Chicago metropolitan area was $61,598 and $53,657 nationally.
Median Household Income Changes among Metropolitan Areas
The decline of real median household incomes nationwide may be symptomatic of broad challenges in the economic well-being of U.S. households. The introductory graph shows that since 1989, Chicago, Boston, and Los Angeles have experienced declines in real median household income, while income in New York has increased. Household income in Washington, D.C., did not change significantly. Los Angeles experienced the largest decline in median household income, where it dropped by 8.4 percent, followed by Chicago, which experienced a 7.2 percent decline in household income. New York, which experienced a net increase in median household income of 6.3 percent, is unusual compared to its peers and the national average. Part of this increase may be attributed to demographic shifts and changes in the MSA's geographic boundary.
Despite overall declines since 1989, median household income in the Chicago region still exceeds the national average. Large metropolitan economies often have high concentrations of human capital and traded clusters, both of which play a significant role as drivers of wage growth and innovation. Among 381 metropolitan areas in the U.S., the Chicago MSA had the 48th highest median household income in 2014. The three MSAs with the highest median household income in 2014 are San Jose ($96,481), Washington, D.C. ($91,193), and California-Lexington Park, MD ($86,417). Among its peers, Chicago's median household income exceeds that of Los Angeles, but lags behind Washington, D.C., Boston, and New York.
About the Data
Household income data are collected and reported by the U.S. Census Bureau via the decennial census and American Community Survey. Historical MSA geography boundaries for 1989 and 1999 may differ slightly from 2005-14 MSA boundaries. Data include income generated by all individuals in each household age 15 and up. Data are adjusted to 2014 dollars using the U.S. Bureau of Labor Statistics Consumer Price Index (CPI) calculated by geographic region or metropolitan area where available. The Chicago MSA encompasses 14 counties, including the counties of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry, and Will in Illinois, Kenosha County in southeast Wisconsin, and the counties of Jasper, Lake, Newton, and Porter in northwest Indiana.
For more on this indicator, refer to the CMAP ACS household income Policy Update.
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Real Gross Regional Product
The annual value of all goods and services produced in Chicago and peer metropolitan statistical areas (MSAs), reported in 2009 chained dollars.
Why it matters
In 2014, the Chicago metropolitan area produced approximately $558 billion worth of goods and services. Since 2001, real gross regional product (GRP) growth in the Chicago region has lagged behind growth rates in Washington, D.C., Boston, Los Angeles, and New York MSAs.
Chicago Real Gross Regional Product
The Chicago region's real GRP grew between 2001-07 before experiencing a substantial decline between 2007-09, during the most recent recession. Real GRP peaked at $553.3 billion in 2007 and then fell to $521.2 billion by 2009. Since the end of the recession, the region's real GRP has increased to approximately $557.8 billion in 2014, surpassing the 2007 pre-recession GRP peak.
Metropolitan Trends in GRP Growth
Real GRP growth trends in other metropolitan areas show that since 2001, Chicago's regional economy has grown at a slower pace than its peer regions. The following chart shows real GRP growth in Chicago's peer regions by indexing GRP to 100 in 2001 to emphasize year-over-year changes on a comparable scale.
Between 2001-07, the region's real GRP grew by 9.7 percent, which was slower than growth in Boston, Los Angeles, New York, and Washington, D.C. The impact of the most recent recession was varied among peer metropolitan economies but appeared especially pronounced in Los Angeles and Chicago, which are home to the first and second largest manufacturing clusters in the U.S. Between 2009-14, real GRP in the Chicago metropolitan area grew by 7 percent.
About the Data
Data presented show "real" GRP, which adjusts totals to count for the effects of inflation on purchasing power, allowing for equal comparison between different years. GRP statistics are reported by the U.S. Bureau of Economic Analysis on an annual basis and are reported in 2009 chained dollars. Data show real GRP values for MSAs as defined by the U.S. Census Bureau. The Chicago MSA encompasses 14 counties, including the counties of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry, and Will in Illinois, Kenosha County in southeast Wisconsin, and the counties of Jasper, Lake, Newton, and Porter in northwest Indiana.
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The percentage of labor force participants who are currently unemployed. The labor force is comprised of those who have jobs and are working, plus those who are not employed and have actively sought work in the past four weeks.
Why it matters
In 2015, the unemployment rate in the Chicago metropolitan statistical area (MSA) was 5.9 percent, exceeding the national average of 5.3 percent. Although the Chicago region continues to recover from the recession, its unemployment rate remains higher than peer metros such as New York, Boston, and Washington, D.C. The unemployment rate is a key measure of metropolitan economic vitality. It provides insight into the health of metropolitan labor markets and allows for standardized regional and national comparisons.
Trends in Unemployment
The unemployment rate in the Chicago MSA closely mirrors national rates. During the early 1990s, unemployment in the region exceeded national averages dipping below the national average between 1994-99. Unemployment in the region exceeded the national average between 2000-06 and has continued to exceed the national average since 2008.
Unemployment Compared to Peer Regions
In recent years, the unemployment rate in the Chicago region has been consistently higher than rates in peer regions like Washington, D.C. and Boston, but generally lower than unemployment rates in Los Angeles. Historic unemployment levels in Chicago, Los Angeles, New York, and Boston converged in 2006 near the national average of 4.6 percent. The impact of the latest recession on employment in each metropolitan area has been varied, though all regions experienced substantial increases in the rate of unemployment. While Chicago's recovery continues to lag behind peer and national averages, the region has made progress. Since 2010, the region's unemployment rate has decreased by 4.7 percentage points to its current rate of 5.9 percent in 2015.
About the Data
Data show unemployment rates for metropolitan statistical areas as defined by the U.S. Census Bureau. Unemployment levels are tracked by the U.S. Bureau of Labor Statistics. Annual unemployment rates are calculated using the average of all twelve monthly metropolitan unemployment rate estimates. People who have lost their job and become discouraged about the prospect of finding work and have not sought employment in the last four weeks are not considered part of the labor force and therefore not included in unemployment estimates. Due to the length of the recent economic downturn, some controversy has arisen over unemployment rate metrics since the measure does not include discouraged persons; a CMAP Policy Update analyzes alternative measures of unemployment. The Chicago metropolitan statistical area MSA encompasses 14 counties, including the counties of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry, and Will in Illinois, Kenosha County in southeast Wisconsin, and the counties of Jasper, Lake, Newton, and Porter in northwest Indiana.
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The percentage of total rentable building area (RBA) that is unoccupied in retail, office, and industrial spaces in the Chicago region and peer metropolitan statistical areas (MSAs).
Why it matters
In 2015, the region's retail, office, and industrial vacancy rates exceeded national averages as well as most peer MSAs.
Factors influencing non-residential vacancy rates
Vacancy rates reflect the balance between a region's supply and demand for space. This indicator provides insight into economic conditions as well as the development needs of different types of businesses. Across all non-residential development types, the vacancy rate can be influenced by factors such as corporate restructuring or relocations, changing building configuration standards, changing consumer preferences, and economic shifts in the types of industries that occupy a particular development category. Since development of new buildings can take several years, over-building because of inaccurate demand projections can also lead to higher vacancy rates.
All development types are expected to have some level of vacancy because of factors such as movement of tenants, landlord preferences, and general market fluctuations. This indicator uses CoStar data on vacancy rates for the region's total existing rentable building area (RBA), as reported by brokers and owners. A space is considered vacant regardless of lease obligation or availability (e.g., a space that is leased but not occupied would be considered vacant).
Vacancy rate trends among metropolitan areas
The three main types of non-residential property are retail, office, and industrial. These account for over 2 billion square feet of space in the Chicago MSA as of the end of 2015. The following charts show vacancy rates for commercial properties in Chicago and peer MSAs. Over the past decade, metropolitan Chicago's vacancy rate has exceeded the national average and most other regions in all three property types, most notably in retail where its current vacancy rate is over two percentage points above the U.S. average and nearly three percentage points above the nearest peer region, New York.
Retail buildings are used to promote and sell products and services. According to CoStar data, the retail vacancy rate in the Chicago region has been higher than the national average and peer MSAs since at least 2006. National retail vacancy rates increased during the recession as retail sales decreased. After 2009, retail vacancy rates began declining nationally and in most peer MSAs. An exception to this trend, the Chicago region's retail vacancy rate peaked in 2013 at 9 percent. In 2015, the region's retail vacancy rate of 7.8 percent exceeded the national average and was the highest among peer MSAs.
Office properties are primarily used to support services such as administration, accounting, marketing, information processing and dissemination, consulting, human resources management, financial and insurance services, educational and medical services, and other professional services. Looking at total RBA across all office building classifications, the Chicago metropolitan area's office vacancy rate has been higher than the national average and higher than rates in peer MSAs since 2006. During the recession, office vacancy rate increased nationally and in large metropolitan regions, including Chicago. Since the recession, Chicago's office market has recovered faster than some of its peer MSAs and is in line with the nation as a whole, while some peer MSAs, such as Washington, D.C. and New York, experienced increased office vacancy. One factor that may be driving the office market recovery in Chicago is the region's growth in health care and financial industries, which primarily occupy office spaces. In 2006, the Chicago region had the highest office vacancy rate among its peers; in 2014, Washington D.C.'s rate surpassed Chicago's. As of the fourth quarter of 2015, the office vacancy rate in metropolitan Chicago of 13.1 percent approached its 2006 level of vacancy and was the second highest among peer regions including Boston, Los Angeles, New York, and Washington, D.C.
Industrial buildings are used for activities such as product assembly, processing, manufacturing, warehousing, distribution, construction and trades, and/or maintenance. For this analysis, industrial properties include versatile properties, known as flex buildings, which are used for a range of activities from office to research and development and industrial. As with other building types, industrial vacancy increased nationwide during the recession. Since 2009, industrial vacancy rates have steadily declined nationwide and in the region. As of the fourth quarter of 2015, the Chicago region's industrial vacancy rate of 7.3 percent reached its lowest point since 2001, when data for the region are available. A mix of factors contributes to decreasing industrial vacancy rate, including changes in retail markets and evolving supply chain management practices. Chicago and all but one of its peer MSAs had a vacancy rate that was higher than the national average for industrial spaces.
About the Data
The CoStar data used for this analysis represents fourth quarter figures for Census MSAs by three building types: retail, office, and industrial. The Chicago MSA encompasses 14 counties, including Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry, and Will in Illinois, Kenosha County in southeast Wisconsin, and the counties of Jasper, Lake, Newton, and Porter in northwest Indiana.
CMAP data for all three property types dates back to 2006. Vacancy is one of many indicators used to understand commercial real estate trends in the region. Other indicators that can assist with understanding real estate development activities include net absorption of properties, which is the total space occupied at the end of a time period (typically a quarter or a year) minus the amount occupied at the beginning of the same period, taking into account space that has been vacated. The amount of space that has started construction or is under construction, and the amount of space that has completed construction are also indicators that can shed light on real estate development. Additionally, CMAP research has examined some of the public policies that may be influencing particular types of development in the region.