Chicago City Wire

Chicago Mayor Rahm Emanuel used some fuzzy math to boast about the speed of Chicago’s growth during his 2018 budget address, the Better Government Association (BGA) said recently.

Speaking to the Chicago City Council, Emanuel noted improvements to Chicago’s economy, capped off by a comparison of the pace of Chicago’s growth to that of other cities and the nation as a whole.

“And over the last six years, Chicago’s economy has grown faster than the economies of New York City, Washington, D.C., or the national average," he said.

Chicago Mayor Rahm Emanuel

The BGA’s Matt Dietrich evaluated several statistics that could be used to measure economic growth and argued that none of them fully supported Emanuel’s claim. Using his own factors in consultation with economists and financial analysts, Dietrich said that while Chicago’s growth dd outpaced Washington's, it was slower than that of New York City and the country as a whole.

Dietrich focused on three factors commonly used to measure economic vitality: gross domestic product (GDP), personal income and the unemployment rate.

Using data from the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA), as well as assistance from BEA economist Jeff Newman, Dietrich reported that Chicago’s economy has grown faster than Washington in terms of GDP and personal income. Chicago’s GDP growth rate between 2011 and 2016 hit 7.4 percent; Washington's was 3.8 percent over the same period.

Looking at the figures for New York City and the national average, however, Emanuel’s claim breaks down. According to the BEA data, New York’s growth rate was 7.6 percent over that period, and the nation’s was 10.9 percent. The trend was also true of personal income growth rate comparisons, with Chicago clearly outstripping Washington but lagging behind New York and the country as a whole.

In terms of unemployment rates, Dietrich used data from the U.S. Bureau of Labor Statistics to determine that Chicago’s unemployment rate dropped 41 percent between 2011 and 2016, from 9.9 percent to 5.8 percent. This is again better than Washington's performance over the same period but worse than New York City’s and the national average. Washington saw an unemployment reduction of 37 percent, while New York’s unemployment dropped 44 percent and the county’s fell by 45 percent.

Further confounding the question of unemployment rate comparisons, Dietrich noted a June report from Moody’s that suggested that Chicago’s falling unemployment is not necessarily a positive sign for the city’s economy. According to the report, published as Chicago’s unemployment rate dropped below the national rate, Chicago's lower rates are indicative of a declining labor force rather than increased employment.

A University of Illinois (UI) economist confirmed that contextual factors make Chicago’s recovery impressive. Dietrich contacted Geoffrey Hewings, emeritus drector of the the university's Regional Economics Applications Laboratory, who backed up some of Emanuel’s remarks.

“The main problem is that generalities like this depend upon context. Clearly, there is little appreciable difference in the economic performance between Chicago, (New York) and the U.S. as a whole; Chicago does do better than D.C.,” Hewings said in an email, according to the BGA. “However, given the fiscal problems in Illinois, it is surprising that Chicago has done as well as it has and of course, the city of Chicago has faced significant fiscal challenges as a result of rather creative accounting manipulations in the last decade.”