Retail sales in the Chicago area inched up slightly in the first quarter, marking the first year-over-year improvement since 2007, but also signaling that the region has a long way to go to recover from the economic downturn.

According to a report to be released today, the six-county metropolitan Chicago area generated $21.29 billion in sales for the first three months of 2010, up $43.5 million, or 0.20 percent, from the same period a year ago, according to the report from Melaniphy & Associates Inc. The city of Chicago had $4.76 billion in sales, an increase of $12.4 million, or 0.26 percent.

The report concludes that while consumers are loosening their grips on their wallets, retail sales fell so dramatically during the recession that the region has yet to make up the lost ground.
“It did turn around, but it didn’t turn around a whole lot,” said John Melaniphy, a Chicago-based realty consultant and publisher of the report. “When you look at how much everything fell, yes, we’ve turned the corner and yes, things are getting better, but it will be a slow recovery.”

Even with the first-quarter gain, sales in the metropolitan area remain 11 percent below the first quarter 2007 level of $23.97 billion (the recession began in December 2007.) Similarly, the city of Chicago’s sales are 9 percent lower than the $5.23 billion in the same time frame.

Consumer spending is likely to remain constrained as long as housing values remain below 2007 values, unemployment is high and job growth is disappointing, said Melaniphy. That means municipal governments will face increased pressure to increase sales tax rates to make up for the drop in retail receipts, he said.

The metropolitan area got a boost in the most recent quarter from furniture and electronics stores, which rose 14.5 percent, and from apparel and accessories, which gained 8 percent. The city of Chicago saw sales at auto dealers and filling stations rise 13.5 percent, while apparel and accessories gained 10.3 percent.

Among the categories that fell both in the city and across the Chicago area were food stores, building and hardware stores and the broad category of drug stores and miscellaneous retail.

Melaniphy took a closer look at six big suburbs with lots of shopping: Schaumburg, Naperville, Aurora, Joliet, Orland Park and Oak Brook. While first-quarter sales grew slightly in each municipality except Joliet, sales at all six suburbs failed to reach the pre-recession highs of 2007 — they were down 17.5 percent in Schaumburg, 9.1 percent in Aurora, 11.2 percent in Joliet, 15.7 percent in Orland Park and 8.8 percent in Oak Brook.

Sales figures are calculated based on recently released sales tax data from the Illinois Department of Revenue. Illinois is one of the few states that makes retail sales tax data public, allowing analysts to get an accurate picture of consumer spending.

Out of the six counties tracked, Kane experienced the biggest jump in sales at 4.3 percent. Will county rose less than 1 percent.  DuPage and Cook counties, excluding Chicago, were about even with last year. Lake fell 0.7 percent and McHenry dropped 1.6 percent.