Retail sales in the Chicago metropolitan area-especially in suburban Cook County, which has seen the most significant increases in tax rates over the past year- show continued weakness, according to an analysis prepared by the Chaddick Institute for Metropolitan Development at DePaul University and the Chicago office of ERA AECOM, an economic policy consultancy.

Those findings, contained in "Emerging Trends in Sales Tax," are based on an analysis of retail sales between 1995 and early 2009 in more than 250 communities in the six-county greater Chicago area. The analysis was presented at a briefing to local municipal government officials Aug. 31 at DePaul.

The authors noted several significant trends:

The differences in sales tax rates among communities in the metropolitan area have reached historic highs. Due to increases in rates of taxation enacted in 2008, the average difference in sales tax rates Cook County and each of the five collar counties ranges from 2.16 cents to 2.58 cents. This has created stronger incentives for consumers to shift their buying behavior.

Metropolitan Chicago is experiencing sharper declines in sales than U.S. as a whole. The average decline during the first quarter of 2009 (the most recent data available) was approximately 10.8 percent, compared with roughly 9 percent for the country as a whole.

Suburban Cook is experiencing particularly large declines in retail sales. Between October 2008 and March 2009 (the most recent six months available) the decline facing Suburban Cook (down 11.9 percent) exceeded the decline in each of the five collar counties (which average 10.6 percent) by an appreciable margin. These declines are larger than can be explained by an extrapolation of regional and national sales trends. The decline in suburban Cook is roughly one-half of a percentage points higher than would be expected by national and regional trends. The authors suggest that the rise in sales tax rates is likely responsible for some of the decline.

The loss in retail sales was smaller in the city of Chicago, in part because of significant new retail inventory (particularly big-box stores) that has opened in recent years, which apparently has lessened the loss in sales to suburbs. Nevertheless, the decline in the city was still approximately 9 percent over the six-month period studied, well above the national average.

To review the "Emerging Trends in Sales Tax" report, click here.