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July 2017 Market Update

July 2017 Market Update - Chicago leads major U.S. cities in population loss, sees drop for 3rd year in a row | Steve Cain, RPBG Director - Writer / Editor
These are strange times. Our political world has rarely felt more divided, acrimonious, unsettled and unpredictable. Such conditions generally spread outward, affecting people’s confidence in the future and, ultimately, the direction of our economy. But in today’s world, all the anguish about our body politic seems to have little impact on the economy which continues to hum along as it has done for years and shows every sign of continuing to do.
 
On the national level, the past few weeks have seen considerable hand-wringing about the future of health care. On the left, there is a palpable fear that the Republican proposals from the House and Senate will take away the “essential benefits” that the ACA made law, force millions back into the ranks of the uninsured, and transfer billions of dollars from the poor to the rich. On the right, there is enormous anger at Washington which is thoroughly and completely in Republican hands, yet seems unable to deliver on the promise that has held the party together for eight long years and four election cycles – to replace, if not completely repeal, the Affordable Care Act – better known as Obamacare.
 
On the state level, if anything, things are even worse. There is a dark cloud hanging over Illinois, and it seems to grow blacker and more ominous with every passing day. The state’s calamitous stalemate over the non-existent state budget is about to enter year three. Only this time, there appear to be some real-world consequences that just might start to get the attention of everyday Illinoisans who seem to have brushed off our civic dysfunction up until now. 
 
Specifically, the three major ratings agencies are all threatening to cut Illinois’ bond ratings to junk, an ignominious first in the illustrious history of our great country. With junk status bestowed upon our bonds, other impacts begin to unfold, some of which seem likely to draw the ire of our fellow citizens. Among these is the impending shut-down of all construction work on area highway improvement projects. That would include the rebuilding of the Circle Interchange and I-55/Lake Shore Drive, a development that might just catch the notice of commuters heading into and out of the Loop. Five state universities could be forced into bankruptcy. And oh, by the way, no more Powerball ticket sales in Illinois. Now if THAT doesn’t get people riled up, nothing ever will.
 
The conflict over health care in Washington, or the budget in Springfield, are just the latest skirmishes between the Democrats and the Republicans in an endless stream of conflicts that have been raging between the two parties and, more fundamentally, between Blue and Red America. Yet the stock markets – always a good barometer for how the country is feeling about the economy – are once again near historic highs. The Dow Jones closed Friday, June 30 at 21,349, not far from the all-time high of just over 21,500 earlier in June. 
 
Am I the only one who feels like the disconnect between our political and economic realities is getting hard to reconcile? Has anyone else felt a little schizophrenic when contemplating the permanent state of crisis that defines our politics, and the blue skies and roses that describes our economy?  I will admit to being delighted with the performance of my investment portfolio; but I’m still afraid to turn on the radio in the morning to listen to the news. And I have a feeling I’m not the only one. I just can’t seem to shake this feeling that something has to give. I just hope it’s something good. The way things are going, it is getting harder to be an optimist these days.
 

Evening of Theater and More at Sullivan High - June 13th

An Evening of Live Theater & More at Sullivan High School

Tuesday, June 13 / Doors open 6:15pm / Program begins 7pm

6631 N. Bosworth / Park in lot off Greenview



An Evening of Theater and More at Sullivan High promises to be a genuine "feel good RPBG appreciation night" - and one that might cause you to feel immensely proud to be associated with our organization.

The performance - produced and directed by Lifeline Theater - based on stories from the student actors - reflects the diversity of their lives - and 11 of the 20 actors are immigrants and refugees.

(By the way, the amazing story in Chicago Magazine about Sullivan's refugee program (Welcome to Refugee High) is now available ON LINE.)

The evening's festivities will also allow us to see the fruits of our other contributions: the football team, which went 10-0 after we helped purchase them shoulder pads; the music program which we have assisted by restoring instruments and paying for private lessons; and, of course, the Life Skills classroom which we built, serving students in the Low Incidence program (students with autism and Down Syndrom), where the students will host a dessert reception with cookies they made.

What can  you do? If you plan on attending, please REGISTER - no charge for paid RPBG Members. We will even feed you! (Doors open at 6:15; Program at 7:00. Guests: $10 pre-register; $15 at the door.)

What else? To give students and Sullivan staff a feeling of support, let alone the thrill of performing in front of a packed  house, it would be great if we could draw 80 - 150 people to this event.

Later today we will send out a flyer - please forward it on - or, go ahead and forward this email. Consider bringing your high school age kids - as they might benefit by seeing that high school activities like drama, sports and music are not necessarily opportunities that Chicago high school kids, like those at Sullivan, can take for granted - and 'but for' the generosity of organizations like ours, they might not have them!

There will be a fundraising component to the evening - to fund a theater program next Fall, and to support the newly established non profit Friends of Sullivan, but no expectations, as this event recognizes your past generosity.

Remember - please register, so we can plan accordingly. (Sullivan is at 6631 N. Bosworth; parking lot on Greenview.)

May 2017 Market Update

At the macro-level, the economy appears to be in a sort of high-altitude holding pattern. After dipping a bit mid-April, the Dow Jones is back at near-record highs, and recently flirted with the 21,000 mark. Unemployment is currently as low as it has been since before the onset of the Great Recession. The unemployment rate was 4.5% in March, two-tenths of a point below the February rate and the lowest it has been since May 2007.

On the flip side of this good news, only 98,000 net new jobs were created in March, well below expectations. GDP increased at just 0.7% on an annualized basis during the first quarter of 2017, and consumer spending increased at a disappointing 0.3% during the same period.

In the face of these conflicting indicators, the Federal Reserve’s Open Markets Committee (FOMC) held rates steady after wrapping up their two-day meeting May 2-3. For now, at least, the federal funds rate will remain at its current 0.75% to 1.0% level, although an increase at the next meeting June 13-14 is expected.

So, is the glass half-full or half-empty? And why do so many people still feel so gloomy about the economy this many years into the recovery? One of the explanations for this conundrum is becoming more and more obvious with every passing year – how you feel about the economy depends as never before on where you live.

Trulia, an online real estate resource, recently conducted a study of housing value improvement for the 100 largest metropolitan areas across the country since the end of the recession, measuring house values as of December 1, 2007 and again as of March 1, 2017. What they found was startling. Overall, just 34.2% of all homes nationally have seen values surpass pre-recession peaks, and the disparity in home values was widely correlated with where you live. Certain regions of the country have done much better than others, and even within metro areas, some zip codes have far out-performed others.

Not surprisingly, the metro areas with the most widespread recoveries include such Millennial favorites and technology hot spots as Denver, San Francisco, San Jose, Seattle, Portland and Austin where 80% of more of all homes have increased in value since December 1, 2007. At the other end of the spectrum, the worst performers seem to be those places that were especially high-flying before the recession hit. At the bottom of the Trulia study are such cities as Las Vegas, Phoenix, Tucson, Ft. Lauderdale, Orlando and the Inland Empire (Riverside-San Bernardino, CA) where fewer than 5% of all homes were worth more than they were before the recession. 

A Crain’s article, “Housing Recovery Lags Other Big Metro Areas” (May 3, 2017) picked up this story, and took a look at how the Chicago area stacked up. In short, the answer is – not very well. While a handful of zip codes mostly in and near the downtown area have done well, overall only 7.6% of the homes in greater Chicago are now worth more than they were before the recession. This places Chicago at the bottom on the list of the ten largest metro areas in housing value recovery and in the lowest quintile among the top 100. This poor housing value recovery is closely tied to the area’s below-average job growth and near-zero population growth.

So, the next time you hear someone say they don’t believe the economic recovery has gotten to them yet, don’t be too judgmental. If they live in most of metro Chicago and large parts of the Industrial Midwest – indeed, if they live in any of the nearly two out of three zip codes nationwide where home values have still not fully recovered from the last recession – then they are probably spot on.

June 2017 Market Update

June 2017 Market Update - Chicago leads major U.S. cities in population loss, sees drop for 3rd year in a row | Steve Cain, RPBG Director - Writer / Editor

For the third year in a row, Chicago has lost population. It is the only one of the 20 largest cities in the country to do so. The population loss was very slight – down by only 8,638 people out of a total population of over 2.7 million. But a loss is a loss, and the fact that we are the only large city in the country to be in this position is worrying.

But there was another headline that you might not have noticed because it was much more obscure. Did you hear about the Rider Levett Bucknall North American Crane Index? No, I didn’t think so. Well, as a died-in-the-wool nerd, it caught my attention.

RLB puts out a survey of 13 major cities in Canada and the US that literally counts up the number of cranes in these city-centers at different points in time. As of January of this year (2017), downtown Chicago had the second highest number of cranes (56) of any American city, behind only Seattle (62). At 81 cranes, Toronto was the North American leader. Together, these three city centers accounted for close to 50% of all the cranes in the survey.

These two headlines raise an obvious question that begs to be answered – how can both be true? How can Chicago be alone among the 20 largest US cities in population loss, and still be near the top of the pile in terms of new construction? What the heck is going on?

Crain’s Chicago Business (not to be confused with cranes) had an interesting observation about Chicago’s population loss that I think sheds some light on this subject. In his September 29, 2016 article, Greg Hinz teams up with two demographers to pull apart the population loss numbers to better understand what is happening to our city. A number of interesting findings emerge from this analysis, but the bombshell is this – the population loss currently ongoing in Chicago is primarily due to the continued out-migration of African-Americans from the city, a trend that has been occurring since at least 2000. The Caucasian, Latino and Asian populations all continue to increase, although slowly. And, depending on where you live within the city limits, the economy is either booming, stable or in free-fall. Can you guess which neighborhoods are in the latter category, and which group is most impacted by this decline?

These findings are certainly disturbing and confirm that for far too many Chicagoans, life in the city is often difficult, dangerous and, increasingly, not worth the trouble. But the conclusions of the article also give us reason to believe that our overall population decline does not necessarily have to be permanent, nor does it seem to be accompanied by widespread economic decline. Certainly, if you live on much of the South and West Sides of the city, there are a lot of good reasons to run as far from Chicago as you can get. At the same time, all those cranes (not to be confused with Crain’s) on the horizon are not an illusion. They are very real, and they herald the emergence of 21st Century Chicago which remains a favored location for corporate headquarters, and which is still a leader in finance, advanced business services and, increasingly, technology.

These are difficult times to call Chicago home. Our state officials fiddle while Springfield burns. Our president disparages us (not unfairly) for our violence and our high murder rate. We are unique in losing population when all of our peers are gaining. But look deeper at the numbers, and the picture changes. As Mark Twain once said, “The reports of my death are greatly exaggerated.” Perhaps this is also true for Chicago in 2017. No one disputes that much is wrong in the city and the state. But it may be too soon to write us off entirely. Perhaps a different and better future could emerge from our current distress. Wouldn’t it be great if this future could benefit all Chicagoans, regardless of zip code or race?

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