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November 2017 Market Update

November 2017 Market Update | Steve Cain, RPBG Director - Writer / Editor
November 8, 2017
 
The latest jobs report came out on Friday. It showed 261,000 new jobs created in October, a welcome reversal of the job losses that occurred the prior month. In fact, the October report revised the September numbers, shifting from a negative (minus 33,000) to a positive (plus 18,000) net new jobs. Unemployment also fell from 4.2% to 4.1%, the lowest it has been since December 2000, nearly seventeen long years ago!
 
The October jobs report is certainly good news for the economy. Part of the reason the October number was so big is the same reason the September number was so low. You may recall we had some interesting weather late summer and early fall this year with three major hurricanes wreaking havoc on the economies of the Texas and Louisiana Gulf Coast, Florida and Puerto Rico. The devastation caused by these storms temporarily put a lot of people out of work. No one expected all of these job losses to be permanent, and the October jobs report is one measure of the ongoing recovery from those weather events.
 
But the trend is still clear. With the upward revision in job numbers for the month of September, the US economy is now in its 85th month (that’s seven years and one month) of positive job growth. This is an impressive number by any measure, and represents one of the longest stretches of job growth the country has ever experienced.
 
If there is any bad news in these job and unemployment numbers, it is that the distribution of these new jobs remains uneven, and is not widespread across the country. The Chicago area seems to be a good example of both the good and the bad of this trend. While the Central Area booms, the rest of the city and region are not doing as well. Overall, the Chicago area economy is growing, but at a slower rate than the nation and most other large metro areas. 
 
One indication of this trend is housing values. While a few downtown and near-downtown zip codes have seen housing values recover to pre-recession levels, most of the rest of the city and suburbs have not. The downtown economy may be the region’s golden goose, but it is not large enough to lift the whole region. Previous large job losses in manufacturing, and current weakness in retail, continue to hobble many parts of the Chicago area. The region’s growing economic sectors are simply not dominant enough to completely make up for the weaker sectors across all areas of the city and suburbs.
 
In my own experience, we have seen weaker demand and declining effective rents for our few remaining available apartment units in Rogers Park and other far North Side neighborhoods. Some of this is simply due to the time of the year. The pre-holiday months of November and December are often the most difficult time of the year to find tenants. 
 
But some of this seems to be due to a shift in the market. After years of steady rent growth and strong demand, the market appears to be tilting from a landlord’s market to a tenant’s market. We have had to reduce rents and are still seeing tepid interest. These observations are anecdotal and personal. I can’t say that other property owners have been experiencing the same thing. But the pain is real – we are having a harder time renting units.
 
Perhaps the continued economic expansion will rev things up in Chicago again and the spring leasing season will bring a return to stronger demand and increasing rents. I, for one, am holding my breath. The national trends do not apply equally to all places. Chicago is not Austin or Seattle. We are just going to have to live with that reality… and keep hoping Amazon chooses us for their next headquarters!
 

 

Immigration, Refugee Resettlement and Rogers Park – Part Two


 

Cumar and Axlam – New Beginnings and the Challenges Ahead

The Road to Nairobi

 
Cumar and Axlam (not their real names) board a bus from Dadaab refugee camp to Nairobi, Kenya. The date is February 10, 2017, one day after a three-judge panel in the Ninth Circuit Court of Appeals in San Francisco stayed the Trump administration’s immigration ban, finding that it was probably unconstitutional.

October 2017 Market Update

October 2017 Market Update | Steve Cain, RPBG Director - Writer / Editor

October 2, 2017

What a way to end the summer. Three hurricanes – Harvey, Irma and Maria – came in quick succession and devastated a wide swath of the Texas Gulf Coast, much of Florida from the Keys to Jacksonville, numerous islands in the Caribbean and, perhaps worst of all, Puerto Rico. The fifty-plus inches of rain in Houston put about a third of that city under water at the height of the storm.  The subsequent flattening of the Keys and near-complete collapse of the electric grid on Puerto Rico will make for a very long recovery in all of these locales. It also guarantees a steady and significant flow of FEMA money to these hard-hit areas.

Yet even as the US southeast suffered some of the worst hurricane damage in many years, the economy continues to hum along and the stock market keeps breaking new records. There are probably a number of reasons why the economy continues to perform so well. High on that list is Congress’s push to implement tax reform.

You might think that, after three tries and as many failures to repeal Obamacare, the markets might be a little leery of the current attempt to reform the tax system. But one look at the Dow Jones suggests otherwise. The markets seem to believe that, past failures notwithstanding, the Republican majorities in the House and Senate and a Republican Chief Executive are all that’s needed to get some sort of tax reform across the finish line. It also doesn’t hurt that the primary investors in the markets – notably the billionaire class – like the tax reform proposal a lot.

And why shouldn’t they? While these reforms are being touted as mainly benefiting the middle class, the statistics tell a different story. The Atlantic magazine reports that a study by the non-partisan Tax Policy Center finds that that taxpayers in the top 1% of households by income will reap approximately 50% of the tax reform benefits. Whether it is the reduction in the top tax bracket from 39.5% to 35%, the elimination of the alternative minimum tax, or a dramatically lower tax on corporations, the wealthiest Americans will benefit the most. For the half of all taxpayers at the lowest end of the income scale, the proposed tax reform will net them just 10% of the total tax savings.

But there are still some big hurdles that must be cleared before tax reform becomes reality. It’s much easier to cut taxes than it is to pay for them. The current tax reform plan knows exactly where it would like to see taxes cut. But it is vague about how where it will find the money needed to keep these tax cuts from exploding the national debt.

Of course, there is the well-worn promise that tax cuts will lead to faster economic growth and higher overall tax revenues – maybe this time it’ll even work out that way? Then there is the general promise that the plan will eliminate lots of special-interest loop-holes and deductions. But which ones? Every loop-hole seems to have its own lobbying group, and you can bet they are all gearing up to fight any effort to cut their loop-hole. Already, the ingenious Republican plan to eliminate the deduction of state and local taxes (generally highest in the Blue states like California and New York) is running into major pushback from the many Republican Representatives who live in the more conservative districts of those states.

We can expect a lot more of this before the proposed tax reform plan ever passes, if indeed it ever does. In the wake of the Obamacare failures and the dubious record of Congressional achievements thus far in 2017, perhaps the markets are being, oh, I don’t know… irrationally exuberant? We will know soon enough. Meanwhile, it sure does feel good to see the Dow zoom ever higher – above 22,500 as I write this article. How much longer can it last? My prediction – at least as long as the tax reform plan seems like it might actually pass. 

 

September 2017 Market Update

September 2017 Market Update | Steve Cain, RPBG Director - Writer / Editor
September 4, 2017
 
The long Labor Day weekend is always just a little bittersweet. As much as we love the extra day off, we know it also marks the end of summer, the return of cooler weather and, for many of us, a renewed focus on making those end-of-year numbers before the holidays hit.
 
This year, like the last several, we can get back into work mode without worrying too much about the state of the economy. According to the Bureau of Labor Statistics (BLS), the economy has not seen a net decline in the number of jobs since September 2010. That makes the 156,000 net new jobs in August the 83rd consecutive month of job gains, one month shy of seven years! 
 
But, about those 156,000 jobs... expectations were higher with predictions at about 200,000. The BLS also revised job numbers downward for June and July by 41,000, reflecting an economy that is expanding, but at a sluggish pace. Finally, unemployment ticked up to 4.4% from 4.3%. Not a big change, and nothing that anyone seems to think is worth losing sleep over. But it is not the robust growth than many have been hoping for, and that the stock markets still seem to believe is coming. Despite the mildly disappointing news, the equities markets continue to perform well with the Dow Jones just under 22,000 as I write this market review.  
 
Perhaps the biggest surprise of the latest round of economic news is the surprising weakness is wage growth. This is especially puzzling, given that the unemployment rate has been at or below 5% since September 2015. Generally, when unemployment falls to “full employment” levels (somewhere in the 5% range), pressure on wages increases. But that does not seem to be happening, at least not right now. The good news is that this may cause the Federal Reserve to hold off on further increases in interest rates. But the bad news is that, for a lot of Americans, wages are still barely keeping up with expenses.  
 
One big concern not reflected in any of these numbers is the impact of Hurricane Harvey which devastated Houston and other parts of the Texas and Louisiana Gulf Coast at the end of August. Houston alone accounts for approximately 3% of the US economy, and the state of Texas accounts for almost 10%. The flooding in the region was widespread, impacting residences and businesses alike. Even worse, there is at least a possibility that these horrors could be compounded by Hurricane Irma which is now a Category 4, and could potentially blow into the Gulf of Mexico later this week.
 
Putting aside the possibility of a second hurricane, the recovery from Hurricane Harvey is likely to take many months and cost tens of billions of dollars. Although fewer people died in Harvey than Katrina, the devastation could be more impactful on the national scene for the simple reason that Houston is a much larger and more economically important city than New Orleans.
 
We won’t know for another month what impact Hurricane Harvey had on the national economy, but it is hard to imagine that it will not be felt, at least in the short term. The statistics are staggering. One million cars unusable; 40,000 homes destroyed and many more damaged; oil refineries shut down. Just east of Houston, the entire city of Beaumont is still without running water. For tens of thousands of Texans, getting back to work will be difficult if not impossible. Even those with dry houses and working cars may find that their employers are shut down or inaccessible. For those whose cars were destroyed by the floods, just getting to work in car-dependent Houston will be a major challenge. 
 
Kind of makes crying over the end of summer seem a bit silly. There are worse problems in the world – just ask anyone who lived through Harvey.
 

 

August 2017 Market Update

August 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

The economic recovery is a little like the Energizer Bunny – it just keeps going. Signs of the good times are all around us. The Dow Jones hit another high, breaking through 22,000 for the first time on August 2. The jobs report for July showed 209,000 new jobs for the month and unemployment declined to 4.3%, the lowest rate since March 2001. Corporate profits have generally exceeded expectations. By any measure, this seems to be an economy hitting on all cylinders.

Hidden in all this good news is the somewhat surprising slump in the dollar relative to other currencies. Normally, the red-hot US economy would translate to a stronger dollar as more investors rush to invest money in the US. But just the opposite is happening with a declining dollar against pretty much all the major world currencies including the Euro, the Chinese Renminbi, the Japanese Yen, the Swiss Franc and even the British Pound which has been pummeled in the wake of Britain’s decision to pull out of the European Union.

The decline in the dollar is also surprising, given that the US generally – and the US dollar in particular – are considered safe-havens in a turbulent world. But this time, it looks like the world is laying at least some of the responsibility for global turbulence at the doorstep of the United States. This has much to do with recent antics in Washington and, more recently, the saber-rattling between Donald Trump and the North Koreans. Whatever the reasons, our currency is not doing as well as our economy.

Perhaps the best measure of the nervousness in the equities markets is the performance of the VIX, also known as the Volatility or “Fear” Index that was created by the Chicago Board Options Exchange. As recently as July 26, this index dropped below 9, it’s lowest reading ever. But over the past few days, the index has risen again, partly due to escalating tensions between the US and North Korea but possibly also due to growing concerns about American leadership (or the lack thereof) on the world stage.

So, here we are once again wondering if we should pop the champagne or run for the hills? If you’re looking at the stock market, unemployment rate or corporate profits, this is indeed the best of times. But if you’re wondering how far those North Korean intercontinental ballistic missiles can really travel, then perhaps buying more stocks is not your primary concern.

My best advice – assuming North Korea hasn’t launched a nuclear missile at Guam, or the US hasn’t launched a pre-emptive attack on Pyongyang by the time you are reading this article – is to take a deep breath and relax. It’s still August, a generally a slow month for the markets while many Wall-Streeters are out on vacation. So, do like the magnates. Take a break. Go to the beach (it doesn’t have to be The Hamptons) or escape to your cabin. We only have a few weeks left to enjoy the summer before school starts up again (well, maybe not in Illinois – but I digress). Enjoy the last weeks of our all-too-short summer season. Fall is just around the corner and summer hours will be a thing of the past very soon. We’ll be back at work worrying about the next crisis before you know it. They’ve been coming fast and furious lately. No sign that that is going to change anytime soon.

 

Immigration, Refugee Resettlement and Rogers Park – Part One


 

This is the story of Cumar and Axlam (not their real names), two recent arrivals to Chicago and to Rogers Park. Unlike just about everyone reading this article, Cumar and Axlam were not able to simply book a flight or rent a U-Haul and move. In fact, when they began their odyssey, the odds of them successfully getting to the United States were almost laughably remote.

 

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Video - The Sullivan High School Soccer Team

Sullivan from Anthony Pellino on Vimeo.

Sullivan High School sits in the Rogers Park neighborhood just north of the Chicago loop. Their soccer team, The Tigers, is made up of 14 different players from 13 different countries. They are the only urban team to compete in Chicago's highly competitive High School Premier League.

Many of the players do not speak English, and rely on select teammates for translation. This film is a glimpse into their 2016 playoff run, and serves as a look into the passion and love these young men have for the sport that has helped them persevere through so much.

Production: Reverse (thisisreverse.com), Curfew (curfew.tv)

Director: Anthony Pellino
DP: Zach Lowry, Jason Koontz
Boom/Mix: Scott Wietrzykowski
Editor: Carlos Flores
Color: Kath Raisch / Company 3 Color
Producer: Kate Aspell
Original Score: Ankit Suri
Sound Mix / Master: Lyell Roeder

 

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.)

 

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