2015 2016 Forecast for Muskegon County 2014 Was Another Great Year, but I Am Still Looking for Clouds George A. Erickcek Brian Pittelko W.E. Upjohn Institute for Employment Research January 30, 2015
A Special Thanks to: Our breakfast sponsors: Our program sponsors: 1
Outline The national economy is speeding forward on $2.00 per gallon gasoline and low interest rates Robust car and truck sales are fueling Michigan s economy Muskegon County had a good year in 2014 Forecast: continued employment growth 2
GDP Grew by a Robust 5.0 Percent in the Third Quarter, and Forecasters Are Promising Continued Growth 6 Gross Domestic Product and Nonfarm Employment 1,500 Percentage change in GDP 4 2 0-2 -4 Employment gains have been outstanding, more than 800,000 jobs in the fourth quarter. Forecast 1,000 500 0-500 -1,000-1,500-2,000 Employment change (000s) -6 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1 GDP Nonfarm employment -2,500 Source: BLS, BEA, University of Michigan RSQE. 3
Employment Conditions Have Improved; the Number of Job Seekers Per Opening Has Dropped Below 2 6,000 U.S. Job Openings and New Hires 8 5,000 Job openings at end of month 7 Thousands (000s) 4,000 3,000 2,000 1,000 Job seekers per opening 6 5 4 3 2 1 Unemployed / job openings 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 0 Source: BLS. 4
Too Many People are Not in the Game 68.0 66.0 64.0 Participation Rate and Employment Ratio, U.S. Labor Participation Rate 62.0 60.0 58.0 56.0 Employment-to-Population Ratio 54.0 Dec 2004 Dec 2005 Dec 2006 Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Source: BLS.
Prices and Interest Rates Remain Low: Prices may be too low but who is complaining about $2.00 per gallon gas? 6.0 Interest Rates and Inflation Annual percentage rate 5.0 4.0 3.0 2.0 1.0 0.0-1.0-2.0 10-year Treasury bill 12-month change in CPI-U 30-year mortgages 3-month Treasury bill -3.0 2009 2010 2011 2012 2013 2014 Source: Federal Reserve, BLS. 6
Consumer Confidence Index Finally Topped 100 Despite Stagnant Wages; However, Other Polls Have Not Been as Positive Real Hourly Earnings and Consumer Confidence 50 120 $ Per hour 2014 dollars 45 40 35 30 25 20 15 10 5 100 80 60 40 20 Consumer Confidence Index 0 2009 2010 2011 2012 2013 2014 0 Real hourly earnings Consumer confidence Source: Conference Board and BLS. 7
So Let s Sum Up The national economy was surprisingly strong in the third quarter and continued growth is forecasted Inflation and interest rates are low and expected to stay low. Gas prices may stay low for the year. National employment is on the rise but wages remain flat The Fed has stopped its purchasing of bonds but will likely keep interest rates low The only cloud: the nation is standing alone in the global economy 8
Michigan Forecast Strong auto sales are pushing the state forward and most are forecasting that auto sales will remain high until at least 2017 The state s unemployment is down to prerecession levels but still higher than the nation s Employment growth is expected in 2015 and 2016 9
In 2014, State Employers Added Nearly 30,000 Workers 14 12 10 8 6 4 2 0-2 -4-6 Manufacturing Mining, logging, const. Employment Change, 2013 to 2014 (in thousands) Wholesale Transport. and util. Retail If you are will to accept a 2.8 manufacturing employment multiplier, manufacturers are driving the entire state economy. Information Financial activities Prof. and business Leisure and hospitality Education and health Other services Government Source: BLS CES. 10
Auto Sales Continue to Pick Up and Are Forecast to Drive Past 16 Million Units in 2015 and 2016 24 22 20 18 16 14 12 10 8 6 4 2 Strong sales years are expected in 2015 and 2016; and what about $2.00 per gal gas? 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: BEA. 11
The State s Unemployment Rate Is Back to Pre- Recession Levels and Now Stands at 6.3 Percent 16 Unemployment Rate Percent of labor force 14 12 10 8 6 4 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: BLS LAUS. 12
Latest University of Michigan Employment Forecast for the State Is Very Bullish Employment forecast: 2015 50,250 jobs 2016 52,140 jobs Source: University of Michigan RSQE, Nov. 2014. 13
Muskegon County Unemployment rates are down to levels unseen since 2001 Employment grew by nearly 1,000 jobs in 2014, a gain of 1.5 percent Construction is still down, but there are signs of hope Compared to its peers, Muskegon is doing ok However, its manufacturing sector has been competitive Forecast maintains positive 14
18 16 14 12 10 8 6 4 2 The County s Unemployment Is Falling and for the Right Reason Unemployment Rate for Muskegon MSA 0 2000 2002 2004 2006 2008 2010 2012 2014 Source: BLS LAUS and Upjohn Institute. 15
The Unemployed Are Finding Jobs and the Improving Labor Market Is Pulling Individuals into the Work Force November-to-November Change Year Labor force change Employment change Unemployment change 2011-101 2,184-2,557 2012-14 593-687 2013 81 171-95 2014 1,602 3,755-2,449 Source: MI Labor Market Indicators, Local Area Unemployment Statistics. 16
Employment in 2014 Rose by Nearly 1,000 Jobs, a 1.5 Percent Increase 500 400 300 200 100 0-100 -200-300 -400-500 Employment Change, Jan Nov 2013 to Jan Nov 2014 Manufacturing Trade, Transport. and Mining, logging, util. and const. Information Financial Prof. and business Education and health Leisure and hospitality Other services Government Source: BLS CES. 17
Moderate Employment Gains in the County s Manufacturing Sector Were Broad Based 120 100 Employment Change, Q1 2013 to Q1 2014 Fabricated metal 80 60 40 20 0-20 -40 Food Textile Printing Primary metal Nonmetallic mineral Plastic and rubber Chemical Machinery Computer Furniture Elec. equip. Transport. Misc. Source: BLS QCEW. 18
Current Job Postings Are across the Board; However, Production Jobs Are Down Job Posting Change, 2013 to 2014, All Occupations Healthcare Management Office and admin. Education Architecture and eng. Community and social services Life, physical, and social science Food prep. and serving Protective service Business and financial Healthcare support Legal Arts, design, ent., etc. Farming, fishing, and forestry Transport and material moving Computer and mathematical Construction and extraction Personal care and service Production Installation, maint., and repair Cleaning and maintenance Sales and related -150-100 -50 0 50 100 150 200 Source: BurningGlass Labor Insight. 19
There Is Little Evidence that Wages Are on the Rise Annual income ($000s) 90 80 70 60 50 40 30 20 10 0 Full-Time Production Wages in Muskegon 10th Percentile 25th Percentile Median 75th Percentile 90th Percentile 2007 2008 2009 2010 2011 2012 2013 Source: IPUMS USA. 20
Unfortunately the County s Residential Housing Market Is Still Flat, Although 900 800 700 600 500 400 300 200 100 0 Construction Permits Issued, Muskegon 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total, all structure types Single-family houses Source: U.S. Census. 21
Housing Prices Are on the Rise 180 160 140 120 100 80 60 40 20 0 FHFA Housing Price Index (1995=100) In addition, current reports suggest that 2015 will be a much better construction year. Source: FHFA Housing Index. 22
The County Has Still Not Fully Recovered from the Recession 110 Total Employment Index (2000=100) 105 100 95 90 85 During the recession the area lost 5,000 jobs. Since then Muskegon has regained 3,100 jobs. 80 2000 2002 2004 2006 2008 2010 2012 2014 United States Michigan Muskegon Source: BLS LAUS and Upjohn Institute. 23
After a Robust Rebound, the County s Manufacturing Sector Has Stabilized at Pre-Recession Levels 105 Manufacturing Employment Index (2000=100) 95 85 75 65 55 45 2000 2002 2004 2006 2008 2010 2012 2014 United States Michigan Muskegon Source: BLS LAUS and Upjohn Institute. 24
120 115 110 105 100 95 90 85 The County s Service Sector Is Still a Bit Short of 2008 Levels Private Services Employment Index (2000=100) 80 2000 2002 2004 2006 2008 2010 2012 2014 United States Michigan Muskegon Source: BLS LAUS and Upjohn Institute. 25
Comparison Analysis Comparison Areas: Elkhart-Goshen, IN Jackson, MI Janesville, WI Monroe, MI Niles-Benton Harbor, MI Oshkosh-Neenah, WI Pueblo, CO Racine, WI Saginaw-Saginaw Township North, MI 26
Comparison Criteria All one-county metropolitan areas Within Midwest region Not college town or state capitol All within 16% population of Muskegon County 27
Unemployment Situation Is Similar to the Comparison Areas Average Unemployment Rate, Jan Nov 2014 Muskegon Average Oshkosh, WI Elkhart, IN Janesville, WI Monroe, MI Benton Harbor, MI Jackson, MI Racine, WI Saginaw, MI Pueblo, CO 5.3 5.4 6.9 6.7 6.7 6.7 7.0 7.2 7.3 7.4 7.6 0 2 4 6 8 Source: BLS. 28
Again, the County s Employment Gains Are Par for the Course Muskegon Average Elkhart, IN Janesville, WI Saginaw, MI Pueblo, CO Oshkosh, WI Monroe, MI Racine, WI Benton Harbor, MI Jackson, MI Percent Change in Total Employment, Jan Nov 2013 to Jan Nov 2014-0.5% 1.5% 1.8% 1.9% 1.8% 1.8% 1.6% 1.4% 1.0% 2.9% 4.0% -3% -1% 1% 3% 5% Source: BLS. 29
Service Employment Gains Are Right Muskegon Average Janesville, WI Oshkosh, WI Elkhart, IN Saginaw, MI Pueblo, CO Racine, WI Benton Harbor, MI Monroe, MI Jackson, MI in the Middle of the Pack -1.3% Percent Change in Service Employment, Jan Nov 2013 to Jan Nov 2014-0.2% 1.6% 1.6% 1.4% 1.1% 0.8% 4.0% 3.4% 2.9% 2.4% -2% 0% 2% 4% 6% Source: BLS. 30
The Moderate Growth in Service Employment Is Occurring in Spite of a Decline in Population Population Change, 2010 to 2013 Muskegon Average Oshkosh, WI Elkhart, IN Pueblo, CO Janesville, WI Jackson, MI Racine, WI Benton Harbor, MI Monroe, MI Saginaw, MI -1.8% -1.0% -1.1% -0.7% -0.2% 0.1% 0.1% 0.3% 1.5% 1.5% 1.5% -2% -1% 0% 1% 2% Source: Census Estimates. 31
Same Story for Manufacturing Percent Change in Manufacturing Employment, Jan Nov 2013 to Jan Nov 2014 Muskegon Average Elkhart, IN Pueblo, CO Jackson, MI Monroe, MI Racine, WI Benton Harbor, MI Saginaw, MI Janesville, WI Oshkosh, WI -4.1% -0.5% -1.9% 1.6% 1.7% 3.4% 2.8% 2.4% 1.9% 5.7% 5.5% -6% -4% -2% 0% 2% 4% 6% 8% Source: BLS. 32
This Is a Well-Known Challenge to the County and All Smaller Metropolitan Areas Muskegon Average Oshkosh, WI Benton Harbor, MI Saginaw, MI Racine, WI Monroe, MI Janesville, WI Elkhart, IN Jackson, MI Pueblo, CO Percent of 25- to 34-Year-Olds with a Bachelor's Degree or Higher 16.1% 21.2% 19.9% 19.8% 16.9% 16.7% 15.2% 15.1% 31.5% 28.6% 27.6% 0% 10% 20% 30% 40% Source: ACS 2013. 33
Finally, the County Is a Leader in Job Creation Job Creation as a Percent of Total Employment in 2013 Muskegon, MI Average Janesville, WI Pueblo, CO Monroe, MI Jackson, MI Benton Harbor, MI Elkhart, IN Saginaw, MI Racine, WI Oshkosh, WI 3.7% 4.4% 4.2% 6.8% 5.7% 6.9% 6.6% 6.6% 6.5% 6.1% 5.9% 0% 2% 4% 6% 8% Source: Census QWI. 34
While Employment Fell from 2007 to 2013, Muskegon Manufacturers Grabbed Market Share 3,000 2,000 1,000 Employment Change 2007 to 2012, Muskegon County Difference +2,050 0-1,000-2,000-3,000 Difference -550 Difference -2,600-4,000 Total Employment Goods-Producing Service-Providing Expected Actual 35
Finally, Let s Talk About Talent: A Good Trend among 25- to 34-Year-Olds 16 14 12 10 8 6 4 2 0 Associate s Degree Muskegon Michigan United States 25 to 34 35 to 44 44 to 64 65 and over Source: Census ACS 2013. 36
This Is a Problem for All Small MSAs; It Is Hard to Attract Young Professionals 35 Bachelor s or Higher 30 25 20 15 10 5 0 Muskegon Michigan United States 25 to 34 35 to 44 44 to 64 65 and over Source: Census ACS 2013. 37
But Just a Reminder for All Students and Parents 70 Total Income by Educational Attainment, 2013 Annual income (in $000s) 60 50 40 30 20 10 0 Less than HS High school Some college Associate's Bachelor's Graduate Source: IPUMS USA. 38
People without High School Tend Not to Move, and People with Degrees Move for the Job Unemployment rate 40 35 30 25 20 15 10 5 0 Unemployment Rate by Educational Attainment 2013 Less than HS High school Some college Associate's Bachelor's Graduate Source: IPUMS USA. 39
So, how did we do last year? Not Bad Muskegon MSA Estimated and Forecasted Employment Growth for 2014 Percent change 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% Total Goods-producing Service-providing Government 2.4% 1.6% 1.5% 1.9% 1.4% 1.5% -0.3% -4.0% -5.0% Forecast Estimate -3.8% Source: Upjohn Institute. 40
Before Releasing the 2015 Forecast A Special Thanks To Muskegon Area First and the Forecast Advisory Group A Partial List of New Expansions: Aero Foil International Alcoa Ameriform Versatile Fabrication Bold Furniture CWC Textron Non-Ferrous Cast Alloys
2015 and 2016 Employment Forecast for Muskegon Norton Shores MSA Percent change 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% Total Goods producing Private services Government 2.4% 1.8% 1.5% 1.6% 1.5% 1.6% 1.6% 1.4% 1.1% 0.5% -0.1% -3.0% -4.0% -3.8% -5.0% 2014 2015 2016 42
Parting Comments The Economic Outlook for Muskegon looks strong Its manufacturing sector is competitive However, its service sector is weak and performing below par This is a common trait for smaller MSAs What can be done? Encourage well designed residential development that captures the beauty of your surroundings 43
2015 2016 Forecast for Muskegon County 2014 Was Another Great Year, but I Am Still Looking for Clouds George A. Erickcek Brian Pittelko W.E. Upjohn Institute for Employment Research January 30, 2015