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Good News And Bad News From Chicago

Friday brought 2 wildly divergent economic tells from Chicago.

On the "plus" side of the ledger, the Chicago Region PMI report surprised nicely on the upside, which, in all likelihood, helped, in great measure, the market's rebound from the day's early sell-off to end essentially flat on all of the major indices.

The "bad news" relates to the city of Chicago's latest budget, which has a $654 M hole in it, the LARGEST in the city's history! According to city officials, because of the weak economy, limited relief can be found by increasing revenues ( you can't get blood out of a stone), and will have to focus on cost reduction.

Given the strength of unions in Chicago, I wish them a lot of luck with that. Over the last 12-18 months, there have been numerous spats between Mayor Daley's administration, and various unions, over attempted cost cutting measures advanced by the city.

Recently, construction on various projects (both on area Interstates/expressways, and private projects), came to halt, because of a stoppage by the Laborers' union. Some readers may recall the old joke about the Midwest having two seasons..."winter" and "construction".

Chicago has been "making do" by selling off various "crown jewels" of revenue, such as the recently completed privatization of the city's parking meters, and the "on again/off again" privatization of Midway Airport seems to be moving towards the "on again" side of things.

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