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By the numbers: A snapshot of Chicago’s economy six months into the pandemic

Chicago Tribune logo Chicago Tribune 9/18/2020 By Jonathon Berlin, Chicago Tribune
a person walking down a sidewalk next to a dock: Yana Feyganova does some stretches on the first day of the reopening of the Chicago Riverwalk on June 12, 2020. © Antonio Perez/Chicago Tribune/Chicago Tribune/TNS Yana Feyganova does some stretches on the first day of the reopening of the Chicago Riverwalk on June 12, 2020.

The coronavirus pandemic quickly inflicted damage on Chicago’s economy as government shutdowns and social distancing restrictions forced business slowdowns and closures.

a bridge over a body of water: An aerial view of an empty South Lake Shore Drive seen from Maggie Daley Park in Chicago on May 13, 2020. © Zbigniew Bzdak/Chicago Tribune/Chicago Tribune/TNS An aerial view of an empty South Lake Shore Drive seen from Maggie Daley Park in Chicago on May 13, 2020.

During a six-month period, hundreds of thousands of area jobs were lost, consumer spending dropped 43%, and more than half of temporary business closures became permanent.

Despite hopes to “get back to normal,” the recovery has been slow, and it’s unclear what any long-lasting changes are, said Jose J. Vazquez-Cognet, an economics professor at the University of Illinois at Urbana-Champaign.

“When a business person and a consumer don’t know what to expect, they can’t make decisions very well,” Vazquez-Cognet said. “That’s the worst thing for the economy.”

Here is a snapshot of the economic impact of the virus on the Chicago area over the past six months.

Unemployment

Metropolitan areas around the country are bearing a greater share of coronavirus-induced unemployment and Chicago is no exception. The city’s unemployment rate has remained higher than the national average throughout the pandemic.

a group of lawn chairs sitting on top of a grass covered field: New social distancing circles are drawn on a lawn as visitors relax June 15, 2020, as Millennium Park reopens after it was closed due to the coronavirus pandemic. © Brian Cassella / Chicago Tribune/Chicago Tribune/TNS New social distancing circles are drawn on a lawn as visitors relax June 15, 2020, as Millennium Park reopens after it was closed due to the coronavirus pandemic.

Experts say that’s because cities like Chicago imposed stringent coronavirus restrictions in an attempt to control the virus among concentrated populations and where many jobs are high-contact, such as in retail, dining, and entertainment industries.

The impact of job losses in Illinois has been uneven. In July, the rate of unemployment for women was 13% higher than the rate for men, while the unemployment rate for Black people was 33% higher than the rate for whites, according to Illinois Department of Employment Security data.

“Women and people of color are overrepresented in the industries that have been most impacted by the pandemic, and this is more so the case in Illinois than nationwide,” said Alan Berube, an expert on metropolitan policy at the Brookings Institute.

In Chicago, the hospitality industry has been most affected, with a nearly 27% drop in jobs from July 2019 to July 2020. During the same time period, education and health services lost 4.7% of jobs and transportation lost 5.4%, according to Labor Department statistics.

Job openings

In August, Chicago-area job postings were down 18% compared with the prior year, with one big exception. The tech sector, which includes all jobs at tech-focused companies, saw a 13-fold increase, according to the online job posting site Glassdoor.

a person holding a sign: Arthur Cook, 93, gives his grandchildren, Heidi and Roy Cook, virtual hugs during an outdoor visit at Hillcrest Nursing Center on June 30, 2020, in Round Lake Beach. Arthur had not been outside or visited in person with family members since February. © Stacey Wescott / Chicago Tribune/Chicago Tribune/TNS Arthur Cook, 93, gives his grandchildren, Heidi and Roy Cook, virtual hugs during an outdoor visit at Hillcrest Nursing Center on June 30, 2020, in Round Lake Beach. Arthur had not been outside or visited in person with family members since February.

The companies responsible for the bulk of that growth are Amazon, Instacart, Google, Groupon and Grubhub.

The tech sector has widely benefited from stay-at-home orders that forced workers and consumers to move their activities online.

Business closures

Between May 1 and Aug. 31, 4,993 Chicago-area businesses closed temporarily or permanently, according to the crowd-sourced business review platform Yelp.

As shutdowns wore on, more temporary closures became permanent. As of Aug. 31, more than 60% of Chicago-area business closures were permanent, with restaurants and bars accounting for about a quarter of those, Yelp said.

“Without business, most restaurants can’t survive for more than a few months,” Vazquez-Cognet said. “They are the first to really be hurt because their profit margins are so low.”

a group of people in a room: AMC Theatres reopen with shows downtown at AMC River East on Aug, 20, 2020. © E. Jason Wambsgans/Chicago Tribune/Chicago Tribune/TNS AMC Theatres reopen with shows downtown at AMC River East on Aug, 20, 2020.

As of Aug. 31, Yelp found 638 closed restaurants in Chicago. Several well-known places like Blackbird and Bonci’s Wicker Park location have closed for good.

Vazquez-Cognet believes the restaurant industry will come back eventually, unlike many retail stores, which he said are unlikely to reopen because of a shift in consumer habits toward online shopping.

Retail stores accounted for 18% of area business closures since March 1 and included big names like Pier 1, J.C. Penney, Nordstrom and Brooks Brothers, which closed some Chicago-area stores.

a man wearing a military uniform: Members of the Chicago Police Department Honor Guard perform ceremonial honors before the start of funeral services for Chicago police Officer Ronald Newman at Lincoln Cemetery in Blue Island on April 23, 2020. Newman, 59, was the third Chicago police officer to die of complications stemming from COVID-19. © Antonio Perez / Chicago Tribune/Chicago Tribune/TNS Members of the Chicago Police Department Honor Guard perform ceremonial honors before the start of funeral services for Chicago police Officer Ronald Newman at Lincoln Cemetery in Blue Island on April 23, 2020. Newman, 59, was the third Chicago police officer to die of complications stemming from COVID-19.

Housing

A contracting economy normally leads to lower home prices, such as during the 2008 recession. But U.S. home prices are on the rise.

Cheryl Young, a senior economist with online real estate database company Zillow, attributes the anomaly to a lack of inventory, pent-up demand, and a desire for more space.

a woman standing in front of a store: Asia Brown, right, and co-worker Lekia Wilson grab bottles of bleach as they shop at Pete's Fresh Market in Oak Park on March 19, 2020. © Antonio Perez / Chicago Tribune/Chicago Tribune/TNS Asia Brown, right, and co-worker Lekia Wilson grab bottles of bleach as they shop at Pete's Fresh Market in Oak Park on March 19, 2020.

But while the housing market has run hot, demand for rental properties has cooled.

The difference between home and rental markets is emblematic of what economists call a “K-shaped” recovery: Homeowners making up the top right portion of the K have fared well throughout the recession relative to renters who make up the lower right portion of the K and who are often low-income and essential workers, Young said.

Consumer spending

Spending by Chicago-area residents remains about 15% below pre-coronavirus levels and is below the national average during the pandemic. Consumers cut back spending in most areas including on restaurants, merchandise, entertainment and transportation.

But after hitting its lowest point in March, spending has increased month over month, according to a data tracker developed by economists at Harvard and Brown universities. The tracker combines anonymous, seasonally adjusted data from private companies, including credit and debit card processors, to measure spending by consumer ZIP code.

“The economy comes back when people feel good about spending money, and the best way to tell how people feel about the economy is consumer spending,” he said.

Beginning in March, nearly every industry — from retail to health care — saw substantial drops in consumer spending, with transportation and hospitality companies faring the worst. There was one exception: Grocers saw an expansion to an 80% high over pre-pandemic levels during that time period.

a room filled with furniture and vase of flowers on a table: A funeral service for Johnnie Veasley, 76, left, and her mother, Lela Reed, 95, both victims of COVID-19, at Leak & Sons funeral home in Country Club Hills on April 24, 2020. © Zbigniew Bzdak / Chicago Tribune/Chicago Tribune/TNS A funeral service for Johnnie Veasley, 76, left, and her mother, Lela Reed, 95, both victims of COVID-19, at Leak & Sons funeral home in Country Club Hills on April 24, 2020.

Commercial construction

The construction industry is shaping up to be a bright spot for Chicago’s economy, said Daniel Pomfrett, the vice president of Cumming Corp., a project and cost management firm that has studied the construction market.

“We’re starting to see signs of life,” Pomfrett said, referring to Chicago’s commercial construction volume. “When I look at the whole country, the Midwest is well-positioned to come out of COVID strong, stronger than other states.”

That’s partly because Gov. J.B. Pritzker and other Midwestern governors classified construction as an essential industry in shutdown orders, Pomfrett said.

Still, industry watchers are waiting to see how businesses react to the pandemic. If companies invest in larger office spaces for social distancing, commercial construction could see solid growth. However, if companies switch to a work-from-home model, there may be a drop-off in demand for construction.

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©2020 the Chicago Tribune

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a lit up city at night: Jen Majerus, 38, stands on the balcony of her State Street high-rise condo in the South Loop while participating in the Chicago Unite at Night singalong and light show May 7, 2020, in honor of International Nurses Week. © Chris Sweda / Chicago Tribune/Chicago Tribune/TNS Jen Majerus, 38, stands on the balcony of her State Street high-rise condo in the South Loop while participating in the Chicago Unite at Night singalong and light show May 7, 2020, in honor of International Nurses Week. a man sitting on a bed: Housekeeper Tonia Harvey cleans a bed in the Roseland Community Hospital intensive care unit after a COVID-19 patient died, April 17, 2020. © E. Jason Wambsgans / Chicago Tribune/Chicago Tribune/TNS Housekeeper Tonia Harvey cleans a bed in the Roseland Community Hospital intensive care unit after a COVID-19 patient died, April 17, 2020.
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