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.
Regional Economic Indicators: Trends
Real Median Household Income
The income of the 50th percentile of households in Chicago and peer metropolitan statistical areas (MSAs), in 2015 dollars.
Why it matters
Real median household income is a common measure of the well-being of a region's middle class. The estimated median household income in the Chicago MSA was $63,153 in 2015 -- higher than the estimated national median household income of $55,775. Since 1989, real median household income has declined by 4.5 percent in the region and 2.9 percent nationwide. Among peer metropolitan areas, real median household income has also fallen in Los Angeles and Washington, D.C, while increasing in New York and staying the same in Boston.
National Trends in Median Household Income
The real median household income measures the reported earnings of an average household, while adjusting household income for the effects of inflation on purchasing power. This adjustment allows for the comparison of the average household's well-being 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.
The U.S. Census Bureau's American Community Survey has collected household income data on an annual basis since 2005. Prior to 2005, the decennial census collected median household income data every 10 years.
In 1989, real median household income in the Chicago metropolitan area was $66,154 and $57,450 nationally, in 2015 dollars. During the 1990s, household income increased both in Chicago and nationwide, and since then the region has largely followed national trends. Today, real median household incomes remain lower than in 1989, at $63,153 in the Chicago metropolitan area and $55,775 nationally. The decline of real median household incomes nationwide may be symptomatic of broad challenges to the economic well-being of U.S. households.
Changes in Median Household Income among Metropolitan Areas
By this measure, households in peer metropolitan areas face widely different trends. The introductory graph shows that since 1989, Chicago, Los Angeles, and Washington, D.C., have experienced declines in real median household income, while income in New York has increased. Household income in Boston did not change significantly. Los Angeles experienced the largest decline in real median household income, with a 6.2 percent drop, followed by Chicago with a 4.5 percent decline. Steady growth and labor market recovery since the 2007-09 recession have helped to mitigate these long-run net decreases. New York's 8.8 percent net increase is unusual compared to its peers and the national average. Part of this increase may be attributable 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, diversified metropolitan economies often have high concentrations of human capital and traded clusters, 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 49th highest median household income in 2015. The three MSAs with the highest median household income in 2015 were San Jose ($101,980), Washington, D.C. ($93,294), and San Francisco ($88,518). 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 geographic boundaries for 1989 and 1999 may differ slightly from 2005-14 MSA boundaries. Data include income generated by all individuals age 15 and up in each household. 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
Gross regional product serves as one of the primary indicators to gauge the production and growth of a region's economy. In 2015, the Chicago metropolitan area produced approximately $570 billion worth of goods and services. Since 2001, real gross regional product (GRP) growth in the Chicago region has lagged behind growth rates in the Washington, D.C., Los Angeles, Boston, and New York MSAs.
Chicago Real Gross Regional Product
The Chicago region's real GRP grew steadily from 2001-07 before experiencing a substantial decline during the 2007-09 recession. Real GRP peaked at $553.3 billion in 2007 before falling to $520.1 billion by 2009. Since the end of the recession, the region's real GRP has slowly recovered and increased to approximately $570.1 billion in 2015, surpassing the 2007 pre-recession peak.
Metropolitan Trends in GRP Growth
Real GRP growth trends also demonstrate Chicago's economic health relative to peer metropolitan areas. Since 2001, Chicago's regional economy has consistently grown at a slower pace than the Washington, D.C., Boston, Los Angeles, and New York MSAs. The following chart shows real GRP growth among Chicago's peer regions indexed to 2001 levels to show year-over-year growth on a comparable scale.
About the Data
Data presented show "real" GRP, which adjusts for the effects of inflation on purchasing power and allows for equal comparison across multiple years. GRP statistics are reported by the U.S. Bureau of Economic Analysis on an annual basis, 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 includes those members of the population who have jobs and are working, plus those who are jobless and have actively sought work in the past four weeks.
Why it matters
In 2016, the unemployment rate in the Chicago metropolitan statistical area (MSA) was 5.8 percent, exceeding the national average of 4.9 percent. Although the Chicago region continues to recover from the recession, its unemployment rate -- a key measure of metropolitan economic vitality -- remains higher than peer metros such as Los Angeles, New York, Boston, and Washington, D.C. This indicator provides an important signal of the health of metropolitan labor markets and allows for standardized regional and national comparisons over time.
Trends in Unemployment
The unemployment rate in the Chicago MSA tends to mirror national trends. The region's unemployment levels briefly dipped below the national average during the economic expansion of 1994-99. However, regional unemployment has consistently exceeded the national average since 2000. In 2016, the Chicago region continued its gradual recovery from the latest recession with slower employment gains than peer metropolitan regions and the nation overall.
About the Data
Data show unemployment rates for metropolitan statistical areas as defined by the U.S. Census Bureau. The U.S. Bureau of Labor Statistics tracks unemployment levels. Annual unemployment rates are calculated using the average of all 12 monthly metropolitan unemployment rate estimates. A person who has lost his or her job, has become discouraged about the prospect of finding work, and has not sought employment in the last four weeks is not considered part of the labor force and therefore is not included in unemployment estimates. Due to the length of the recent economic downturn, some controversy has arisen over unemployment rate metrics because 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
Vacancy rates reflect the balance between a region's supply and demand for non-residential space. This indicator provides insightinto economic conditions as well as the development needs of different types of businesses. In 2016, the region's retail, office, and industrial vacancy rates continued to exceed national averages as well as the rates of most peer MSAs.
Vacancy Rate Trends among Metropolitan Areas
The three main types of non-residential, commercial property are retail, office, and industrial. 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.)
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-buildingbecause 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.
Non-residential property accounted for over 2 billion square feet of space in the Chicago MSA as of the end of 2016. 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' rates for all three property types. Most notably, the region's office vacancy rate is nearly four percentage points above the U.S. average; and among peer metropolitan areas, only Chicago exceeds the U.S. average in retail vacancy rates.
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 MSA's rates since at least 2006. As retail sales sank, retail vacancy rates nationwide increased rapidly during the recent recession. Following the recession, rates began to decline nationally and in most peer MSAs. An exception to this trend, the Chicago region's retail vacancy rate peaked in 2013 at 8.8 percent. As of the end of 2016, the region's retail vacancy rate has not declined as quickly as peer MSAs and remains the highest among them at 7.3 percent.
Office properties are used primarily to support services such as administration, accounting, marketing, information processing, consulting, human resources management, financial and insurance services, educational and medical services, and other professional services. The Chicago metropolitan area's office vacancy rate has been higher than the national average and higher than rates in peer MSAs since 2006, even increasing in 2016. During 2010-2015, Chicago's office market had recovered from the recession in line with the national average and faster than some peer MSAs, while Washington, D.C., and New York saw increased office vacancy. One factor that may have driven this office market recovery in Chicago was the region's growth in healthcare, business services, and financial industries, which primarily occupy office spaces. However, by the end of 2016, the office vacancy rate in metropolitan Chicago had again risen to 13.5 percent, remaining above its 2006 level and nearly matching its highest peer – Washington, D.C., with 13.8 percent.
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 can be used for a range of purposes, from office to research and development and industrial. By the end of 2016, the Chicago region's 6.5 percent industrial vacancy rate reached its lowest point since 2001, when data for the region are available. A mix of factors contributed to decreasing industrial vacancy rate, including changes in retail markets and evolving supply chain management practices.
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 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.