Nick Hood: A chill breeze of recession in the Windy City

In Chicago, our roving reporter finds business revenues plunging across the board. But not all are suffering...

Last Updated: 31 Aug 2010

Arriving at Chicago’s massive O’Hare Airport offered no clue as to how hard America’s third largest metropolitan district is having to battle to come through the current financial crisis.  There seemed no shortage of passengers, although business class was a bit thin. There were plenty of aircraft around the tarmac, but unlike the dozens of ships riding high without cargo or ballast that I saw in Singapore’s harbour three months ago, it’s hard to tell when a passenger jet is parked-up and idle.

The first hint of trouble is a piece in the Chicago Tribune, trumpeting how local musicians are riding out the economic storm, their success punningly attributed to their improvisation skills.  Further into the paper, there are comments on how few restaurants have closed, but noting that almost all scheduled new openings are on hold. Go out for a meal, and it is soon clear that many eateries are surviving only through discount offers, which are drawing in those vital few extra diners.

Illinois has an $11bn budget hole - seemingly small beer by comparison with its fellow state (and the world’s eighth largest economy) California.  But the figures for Chicago itself make very painful reading. Having looked hard at its projected revenues earlier this year, the very latest view is that the city will have $64.3m less income this year than it thought only two months ago.

Revenues will be down across the tax and income board, reflecting the reality that no part of the city’s activities remains unaffected. Real estate transaction taxes are down 60%, sales taxes by 7%, income tax by 20%. Even parking fees have fallen by $3m. And the list goes on and on.

This seems a fair barometer of the general US malaise. Unlike New York with its financial market bias, or Detroit with its tragic concentration on the motor industry, Chicago has a good mix of business and commercial activities. Its travails are being repeated all over the Land of the Free.

And as in the UK and many other first-world business locations, professional firms like lawyers and accountants are suffering, with staff lay-offs and offers of extended part-paid sabbaticals. 

But not every firm is suffering. Visiting one law firm - which has a strong focus on bankruptcy and restructuring law - was a trip to glittering new space, with magnificent meeting rooms and even grander views across the city, reached by a special bank of express elevators going only to the client reception floor. 

Still more telling was the time I spent at a specialist restructuring advisory boutique’s offices, currently located in humble offices but directly opposite the glass tower being constructed and where they will soon occupy significantly more space than they have right now. For years to come, they'll be putting their scarce skills to work, helping put America’s struggling economy back on track.

It could be that an ill wind may blow some people good after all, especially in this spirited part of the Mid-West.

This is the latest missive from the travels of our some-time correspondent Nick Hood, a partner at UK insolvency firm Begbies Traynor and executive chairman of Begbies Global Network.

In today's bulletin:

UK economy suffers biggest slump in 50 years
Aston Martin bargain - £20k in 2010
Life no longer a beach for students
Nick Hood: A chill breeze of recession in the Windy City
'35 Under 35' in focus: The risk-takers

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