How’s Business provides a view of Chicago’s local economy. It uses open data to show how several economic indicators have been trending since 2005.
This question doesn’t have a simple, single answer. That’s because the economy is not a simple, single thing. The economy is having a job, starting a business, getting a loan, deciding to save or invest, buying a new home, or missing a mortgage payment.
So if you want to know how the economy as a whole is doing, you have to find numbers that capture the economy’s many pieces.
The numbers we look at
Let’s take them one by one.
Consumer spending is the major driver of the overall economy. By measuring the taxable sales of general merchandise, we can get a picture of how much money is coming in to the Chicago economy.
We don't have a direct measure of spending for Chicago, so we use sales tax revenue as a proxy.
The State of Illinois reports the Chicago's Home Rule Sales tax receipts quarterly. If we know the tax rate, we can back out the original volumes of sales (0.0125% during this period).
These raw numbers need to be adjusted for inflation to current dollars, which we do with the Chicago-Gary-Kenosha Consumer Price Index.
General merchandise, [#6] which we are measuring, includes sales of most tangible personal property including sales of
It does not include the sale of
New businesses create most new jobs. They invent new products. And they pioneer new ways of doing business.
Total businesses depend upon the balance between new businesses starting and old businesses failing. In general, higher rates of business creation increase total economic activity.
The City of Chicago requires most companies to get business licenses [#1] , and reports the number and type of each business license on the City’s data portal. To measure new businesses, we look at all the licenses issued for a particular business location (Acccount Number and Site Number). We look for the oldest license. If the oldest license is a new license and not a renewal, then we figure that the date of the oldest license is when the business location was first licensed.
Construction makes up 4% of Chicago’s economy [#3] . Economists often treat new construction as a leading indicator. That means if new construction rises - or falls - you can expect the rest of the economy to follow.
To measure new construction, we use building permits.
Real-estate developers rehabbing a building, or building a new one, must get a building permit from the City of Chicago [#4] .
For most people, housing is the largest single part of their monthly budget and the for many families the largest asset.
Our data on housing prices comes from the Depaul University Institute of Housing Studies . They have created an quarterly housing price index just for Cook County, which allows you compares a total market across time. The base quarter is the beginning of 2000, with an index value of 100. An index value of 110 means that average market price is 10% higher than it was in the first quarter of 2000 (adjusted for inflation). For more details, you can check out their full methodology.
For most of us, work is the economy.
If we have work, or can get it, the economy seems okay. When we start worrying about our job, or can’t find one, that what a bad economy means to us.
Unemployment is a measure of how many people are out of a job and looking for work. When unemployment is high, people suffer - and so does the economy.
Technically, the unemployment rate is the number of people who are unemployed, divided by the number of both unemployed and employed people.
It’s pretty simple to decide who counts as employed. But just because you don’t have a job doesn’t mean you count as unemployed.
That’s because the Bureau of Labor Statistics - the federal agency that measures unemployment - only counts you as officially unemployed if you don’t have a job, have looked for work in the last four weeks, and are ready to start work if you get an offer. People who are not actively looking for work aren’t counted as unemployed.
Our monthly unemployment rate data comes from the Bureau of Labor Statistics Local Area Unemployment Statistics. The way they calculate this rate is complicated. We get the data from the Bureau of Labor Statistics’s FTP site (the series ID for Chicago unemployment is LAUPS17010003).
Some parts of the economy rise and fall with the seasons. Construction slows down in the winter, because... its winter in Chicago.
These seasonal fluctuations make it difficult to see how businesses, unemployment, and the rest are actually doing.
If we chose a simpler way of finding the trend, like a moving average, the overall pattern would be the same. But our approach improves the accuracy of our trend line, especially for the most recent months.
We focus on how Chicago’s economy is changing, but there are other reports out there that compare our economy with those of other cities. These are useful, so let’s link to them.
This is an Open City project done as a volunteer effort. The team is:
This site was built entirely open source and free to download on Github.
All the data used for this site come from open sources. The raw counts and trend lines are available as JSON.