How much worse can it get?
I just picked up the January employment numbers for the greater Chicago metropolitan area and the picture is getting more grim than I thought – we have hit a new 14 year low. The Chicago area has lost 162,000 jobs in just the
last 12 months and a total of 459,000 jobs
have been lost since employment peaked in July 2007. The unemployment
rate for the Chicago area is now at 11.7%, which is up from a low of
4.6% in November 2007 and that is higher than any rate that I have
access to (going back to 1990). And that unemployment rate is probably understated
because an official national unemployment rate of 10% corresponds to a
real unemployment rate of more like 17.5%.
These numbers had been showing nice growth until June 2008 when employment
started to drop from the previous year. Although a year ago it looked
like the employment numbers in the Chicago area had bottomed, the data
turned around and continues to fall off the cliff.
What does this have to do with the real estate market? Everything. People can’t afford to buy homes if they’re
not working and if they already have a home and lose their job then losing their home is next on the list. So employment levels are a great indicator of long term demand for housing. Therefore, we track the employment numbers reported by the
Bureau of Labor Statistics for the broad Chicago metropolitan area,
which includes such towns as Naperville and Joliet.
Cheer up, Gary, you’re not likely to be badly affected by the unemployment picture. Thus far, at least.
In the current downturn unemployment has impacted lower-income people and less professional occupational levels far more severely. The employment picture is still fairly healthy at the higher-income levels and among managerial / professional classes.
If you parse the unemployment picture by income decile you’ll see a far different picture in the top 20% of earners than in the bottom 20% of earners. Your clients and prospects are largely OK.
Don’t kid yourself, Joe.
Chicagoland lost almost 200,000 jobs between 2001-2009. In 2008, Cook County had 70,000 fewer jobs than in 1990. If you roll forward these numbers to the present when data is released, it is only going to get worse.
Don’t think it is only manufacturing. White collar employment is far down off peak in major industries like consulting. Law is taking a beating right now. Even the city’s own Central Area Action Plan only projects an average of 3,000 new central area jobs a year over the long term, a drop in the bucket compared to the region.
Yes, there are many great and wonderful things about Chicago and happening in this city. It is night and day versus when I moved here in 1992. But the jobs situation is a five alarm fire.
Not kidding myself, Aaron; merely suggesting the different impact that broad figures have on smaller areas and being skeptical about the meaning of aggregate figures.
I’d agree with you that the jobs picture augurs an extraordinarily bleak future for parts of the city and the metro – and has a negative impact on everyone.