But then, he had a trick refrain. It was another "yes we can," alluding back to his theme of unity and participation in a democratic process about which Obama in this speech, his last as the country's 44th president, was incredibly optimistic, particularly given the battering his party has taken as successive national and state elections, despite his presidential victories.

And with next week's presidential swearing-in of the Republicans' Donald Trump, much of what Obama achieved in office is under threat, because the GOP is determined to undo the Obama legacy and because much of it is vulnerable, based as it is on Obama-ordered regulatory change rather than on decisions of a gridlocked congress.

Tickets were free, but at the last minute scalpers reportedly were asking for as much as $US1000 to be in the 20,000-strong audience which heard Obama's endorsement of the strength of the American system – "I leave this stage tonight even more optimistic than when I started – you changed the world. You did."

He enumerated his achievements – including Obamacare, the rescue in his first months in office of a cratering US economy and the killing of Osama bin Laden. But more central than defending his legacy was his reassurance to Americans that, despite a widely held belief that the barbarians were at the gates, it was up to them to defend what had been achieved.

"Yes, our progress has been uneven," he said. Conceding that there often were two backward steps for each forward one, he urged people to participate and engage, to stand up for what they believed in.

"Our democracy is threatened whenever we take it for granted – all of us should be throwing ourselves into the task of rebuilding our democratic institutions," he said, adding at another point: "We all have to try harder."

Being Obama, he went against expectations. There was just a single bald mention of Donald Trump, as president-elect, but no mention of policy differences and instead, an emphasis on the strength of the American democracy – not its weaknesses or the damage that Democrats fear will be inflicted by the incoming administration.

The setting in Chicago was McCormick Place, the lakeside convention centre at which Obama celebrated his 2012 victory with supporters. And the theme was the "one America" riff from his celebrated speech to the Democratic Party convention in Boston in 2004.

"This is where I learned that change only happens when ordinary people get involved, get engaged, and come together to demand it," Obama told the crowd. "After eight years as your President, I still believe that. And it's not just my belief. It's the beating heart of our American idea – our bold experiment in self-government."

Setting out terrorism, inequality and demographic change as constant and ongoing challenges, Obama warned: "These forces haven't just tested our security and prosperity, but they're testing our democracy as well. And how we meet these challenges to our democracy will determine our ability to educate our kids, and create good jobs, and protect our homeland."

Obama urged Americans to understand and to work with each other.

He told them: "If every economic issue is framed as a struggle between a hardworking white middle class and undeserving minorities, then workers of all shades will be left fighting for scraps while the wealthy withdraw further into their private enclaves. If we decline to invest in the children of immigrants, just because they don't look like us, we diminish the prospects of our own children – because those brown kids will represent a larger share of America's workforce.

"For blacks and other minority groups, it means tying our own struggles for justice to the challenges that a lot of people in this country face – not only the refugee, the immigrant, the rural poor, the transgender American, but also the middle-aged white guy who from the outside may seem like he's got advantages, but who's seen his world upended by economic, cultural, and technological change," Obama said. "We have to pay attention and listen.

"Regardless of the station we occupy; we all have to try harder; we all have to start with the premise that each of our fellow citizens loves this country just as much as we do; that they value hard work and family just like we do; that their children are just as curious and hopeful and worthy of love as our own," Obama said. "And that's not easy to do."

The speech finished in tears from both Obama and his wife Michelle – he on the stage and she sitting in the front row of the audience, as he acknowledged her amidst the wildest audience cheering of the night.

"Michelle LaVaughn Robinson of the South Side," he intoned. "For the past 25 years you have not only been my wife and mother of my children, you have been my best friend. You took on a role you didn't ask for. And you made it your own with grace and with grit and with style, and good humour.

"You made the White House a place that belongs to everybody. And a new generation sets its sights higher because it has you as a role model."