West Michigan Economy 2017 Dr. Paul Isely
How I did last year West Michigan Employment Prediction: 2.6% to 3.0% December 2015 December 2016 Actual: 2.4% November 2015- November 2016* US GDP Growth Prediction: 2.1% 2016 Actual: 1.9% - 2.1% with 3 quarters known *CES estimates include Barry, Kent, Montcalm, Muskegon, Ottawa
The US Economy To understand the local economy, start with the US economy What is the strength for 2017? When is the next recession expected?
GDP GROWTH Consensus Forecasts 2017 Wall Street Journal Survey (Dec) 2.4% Livingston Survey (Dec) 2.3% RSQE Model (University of Michigan Nov) 2.3% Federal Open Market Committee (Dec) 2.2% Simple polynomial forecast 1.8%
1970 1972 1975 1978 1981 1983 1986 1989 1992 1994 1997 2000 2003 2005 2008 2011 2014 Billions of Dollars (2009) 16,000 Recession Relationship to Potential GDP Source: BEA, CBO, and Isely 14,000 12,000 10,000 8,000 6,000 4,000 REAL GDP POTENTIAL
Billions of Dollars (2009) When will REAL GDP cross POTENTIAL GDP? 18,500 18,000 17,500 17,000 16,500 16,000 15,500 15,000 14,500 14,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 POTENTIAL REAL GDP Poly. (REAL GDP) Source: BEA, CBO, and Isely
2017 -- Year of the Consumer Median real wage if you have a full time job at a Record High Employment Population Ratio slowly growing Still low compared to last 30 years High compared to the rest of the 20 th century Quit rates almost back to Normal U-6 continues to drop Currently 9.3 Average of 1994 to 2007 is 8.9 Debt Service compared to income record low
The US Story GDP Growth in 2016 projected to be 2.0 to 2.4% Employment Growth Slowing Recession probability starts growing late in 2018 with a high probability it will occur before the end of 2020.
The West Michigan Economy Still Manufacturing
The Slowdown of 2016
Annual Percent Change Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 6 4 2 KOMA Employment Growth Source: BLS and Isely 0-2 -4-6 -8-10 KOMA 3MMA KOMA 12MMA
40 30 20 10 WEST MICHIGAN ISM INDEX 2015-2016 Source: GVSU Supply Chain 0-10 -20 15 JAN MAR MAY JULY SEP NOV 16 JAN SALES INDEX Linear (SALES INDEX) MAR MAY JULY SEP NOV EMPLOYMENT INDEX
<- - Worse Than Year Before Better --> 20% Michigan Retail Index -- SALES Year over Year Change 12 MMA Source: Michigan Retail Association And Isely 15% 10% 5% 0% Current Trend: -5% -10% -15% 2013 January2014 January2015 January2016 January
Muskegon
Annual Percentage Change Dec 2001 Dec 2002 Dec 2003 Dec 2004 Dec 2005 Dec 2006 Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Employment Growth - Muskegon County 6 4 2 0-2 -4-6 -8-10 -12-14 -16 Muskegon County 3MMA Muskegon County 12MMA Source: BLS and Isely
What are people in Muskegon Doing? Industry November Information 800 Financial activities 1900 Mining, Logging and Construction 2200 Other services 2300 Professional and business services 4100 Leisure and hospitality 6900 Government 7700 Education and health services 11100 Trade, transportation, and utilities 14200 Manufacturing 14500 Source: BLS
5000 November 2010 to November 2016 Employment Change Muskegon County 4000 3000 2000 1000 0-1000 -2000
Weekly Wages in KOMA Source: BLS QCEW 2016 Increase Since 2000 Adjusted for Inflation Manufacturing $1,143 36% -3% Health Care $865 54% 10% Retail Trade $551 42% 2%
POTENTIAL
2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Jobs In Young Firms Muskegon County (55% of the Job Gains in 2014 from New Firms) 0-1 Years 2-3 Years 4-5 Years Source: On the Map
Muskegon Worker Flows Source: On The Map
Excess Workers in Muskegon County Live - Work 2014 Live - Work 2004 Agriculture, Forestry, Fishing and Hunting 221 170 Construction 446 608 Manufacturing 4,721 5,289 Wholesale Trade 756 519 Retail Trade -175 11 Transportation and Warehousing 583 271 Finance and Insurance 634 312 Real Estate and Rental and Leasing 246 118 Professional, Scientific, and Technical Services 862 186 Management of Companies and Enterprises 296 202 Administration & Support 2,113 776 Educational Services 736 156 Health Care and Social Assistance 58-588 Accommodation and Food Services 425-362 Other Services 441 167 Public Administration -113-269
Housing What s up with all the building?
Index Year 2000 = 100 200 180 160 140 120 100 80 60 40 20 Housing Price Index Muskegon 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 Index Whole County Muskegon City
Housing Trends in Grand Rapids Area
10,000 0-10,000-20,000-30,000-40,000-50,000-60,000-70,000-80,000 Net Migration Kent, Ottawa, Muskegon and Allegan (KOMA) and Michigan 2011 2012 2013 2014 MI KOMA Source: Census
Hundreds of Permits 70 60 50 40 30 20 10 0 Single Family Building Permits - KOMA Source: Census
Looking Forward to 2017 KOMA
100 West Michigan Confidence Index Winter 2016 80 60 40 20 0 79 84.484.6 81.5 85.9 77 63.2 67.6 65.3 61.4 65.3 60.255.77 48.04 48.89 55.26 57.62 63.35 67.85 75 77.54 78.6 81.2 Government
50% Anticipated Change in Sales for 2017 Compared to Expectations in 2015 and 2016 40% 30% 20% 10% 0% less than 0% from 0% to 1% from 1.01% to 2% 2015 2016 2017 from 2.01% to 3% more than 3%
50% Anticipated Change in Employment for 2017 Compared to Expectation in 2015 and 2016 40% 30% 20% 10% 0% less than 0% from 0% to 1% from 1.01% to 2% 2015 2016 2017 from 2.01% to 3% more than 3%
70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Anticipated Change in Exports for 2017 Compared to Expectations in 2015 and 2016 Less than 0% 0% to 4.99% 5-9.99% 10-14.99% 15% or more 2015 2016 2017
Possible Problems?
Questions? iselyp@gvsu.edu