West Michigan Economic Forecast predicts 2018 growth, identifies challenges
There will be changes in the West Michigan economy in 2018. According to the West Michigan Economic Forecast, an annual report put out by the Seidman College of Business at Grand Valley State University, 2018 is largely predicted to be a year of steady growth for businesses on this side of the state. Paul Isely, associate dean of the Seidman College of Business, worked closely with a team of economists in late 2017 to identify trends in the economy for the coming year, both good and bad.
“We put it out every year, and it’s been coming out since 1995,” Isely said. “Over time it’s become a very stable measure that people can use. We know they think it’s important because they show up to the presentation that we have for this and request the output. This entire process starts with a survey of businesses. We get around a 20-percent response rate in a normal year, which shows a high level of interest in it.”
According to the forecast, 2018 will see an increase in exports and nominal sales, while seeing a decrease in employment rates from 2017. At an event presenting the economic report, Isley also cautioned that there will be a large chance of a recession in 2019.
The report highlights three main challenges potentially facing West Michigan in the coming year: changing tax laws, an uncertain future for the North American Free Trade Agreement (NAFTA) and a lack of workers.
“We certainly have a talent shortage,” Isley said. “We’re running out of the breadth of workers that we need. Now, there’s always going to be somebody unemployed, but essentially, the pool of unemployed workers isn’t big enough to fuel growth in West Michigan.”
According to Isley, if NAFTA were radically changed, Michigan would feel it more than most—and not in a good way.
“Certainly, Michigan is dependent on the automotive industry; it’s something economists are scared about, and it’s something business development individuals are scared about,” he said. “It would negatively affect automotive and agriculture, and those are two big sectors here in Michigan. One in five jobs in Michigan is either directly or indirectly related to automotive. A slowdown in the automotive industry would effectively erase 30,000 to 40,000 jobs.”
President Donald Trump first discussed his desire to revise NAFTA during his 2016 campaign. Recently, that has taken shape as Mexico, Canada and the U.S. debate the future of the trade deal.
While identifying the challenges and growth facing the future of the West Michigan economy, Isley and his team sought to continue the good relationships that GVSU has had with local businesses throughout their survey process. In fact, according to him, a large part of the reason the forecast is so well-received by businesses is because of their close relationship with the university.
“We’re actually up this year from last year (in our response rate),” Isley said. “If you do a cold survey that people don’t know about, you’re going to get a low response rate with this kind of thing. These businesses know GV, and we have a relationship with them. We target (geographical) areas where the businesses have a lot of relationships with the university, so they find value in doing this.”
Their predictions for 2018 have yet to take shape, but Isley and his team are confident that businesses will see growth this year. Despite the challenges facing the economy, there are things for employers to be excited about as well.
“One cool thing is we’ve had a really big bump in the 25-34 age set in the last couple years in Kent County,” Isley said. “It’s rare for that to happen in Michigan, but it’s happening in Kent County, and it’s really fueling the growth we have right now.”