GRDadof3

West Michigan/Grand Rapids Economy

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After taking a breath over the winter and down-shifting to "moderately fast growth", the jobs market locally has returned to "scorching" growth again, averaging 2.1% annual growth over this time (May) last year. 

I'm reporting from Denver, Colorado, one of the fastest growing jobs markets in the country and they're just a few points above us at 2.8%. Seems the sentiment out here is that they don't want people moving there anymore (bumper stickers, radio DJ's making comments, billboards, etc.) Will GR get to that point? I've heard some rumblings about "too many people moving to GR."

 

GR employment 6-2018.JPG

 

1266241416_GRnonfarmgrowth.JPG.668035521b9fa801e52238e627b3e544.JPG

Meanwhile GM is pulling some of its heavy truck axle production from Mexico back to Grand Rapids:

http://www.mlive.com/news/grand-rapids/index.ssf/2018/06/119m_gm_plant_expansion_now_pr.html

WYOMING, MI -- Axles for the 2019 Chevrolet Silverado and GMC Sierra pickup trucks are now rolling off the line at the GM Components Holdings plant in Wyoming after a $119 million expansion.

After announcing its investment in the Wyoming plant in 2015, General Motors revealed Tuesday what the new assembly line would be producing: front and rear axles for its full-sized trucks.

The plant has the "latest and greatest technology," said Troy Comiskey, director of the plant at 2100 Burlingame Ave. SW....

About 250 workers have been hired to staff the new operation, with 50 additional jobs available as a second shift is added in the future, Comiskey said. Training for the jobs is intensive, Comiskey said, as one worker typically will operate three to five machines at once.

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11 minutes ago, GRDadof3 said:

After taking a breath over the winter and down-shifting to "moderately fast growth", the jobs market locally has returned to "scorching" growth again, averaging 2.1% annual growth over this time (May) last year. 

I'm reporting from Denver, Colorado, one of the fastest growing jobs markets in the country and they're just a few points above us at 2.8%. Seems the sentiment out here is that they don't want people moving there anymore (bumper stickers, radio DJ's making comments, billboards, etc.) Will GR get to that point? I've heard some rumblings about "too many people moving to GR."

 

GR employment 6-2018.JPG

 

1266241416_GRnonfarmgrowth.JPG.668035521b9fa801e52238e627b3e544.JPG

Meanwhile GM is pulling some of its heavy truck axle production from Mexico back to Grand Rapids:

http://www.mlive.com/news/grand-rapids/index.ssf/2018/06/119m_gm_plant_expansion_now_pr.html

WYOMING, MI -- Axles for the 2019 Chevrolet Silverado and GMC Sierra pickup trucks are now rolling off the line at the GM Components Holdings plant in Wyoming after a $119 million expansion.

After announcing its investment in the Wyoming plant in 2015, General Motors revealed Tuesday what the new assembly line would be producing: front and rear axles for its full-sized trucks.

The plant has the "latest and greatest technology," said Troy Comiskey, director of the plant at 2100 Burlingame Ave. SW....

About 250 workers have been hired to staff the new operation, with 50 additional jobs available as a second shift is added in the future, Comiskey said. Training for the jobs is intensive, Comiskey said, as one worker typically will operate three to five machines at once.

I hear people talking about not wanting more people moving here. The more the better in my opinion, value of my house goes up, economy grows, more investment comes into the city.

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1 hour ago, GRDadof3 said:

 

I'm reporting from Denver, Colorado, one of the fastest growing jobs markets in the country and they're just a few points above us at 2.8%. Seems the sentiment out here is that they don't want people moving there anymore (bumper stickers, radio DJ's making comments, billboards, etc.) Will GR get to that point? I've heard some rumblings about "too many people moving to GR."

I know you're speaking hypothetically, but for comparisons sake the Denver Metro area has added over 345,000 people  since 2010.  GR metro just over 70k.   The metro has been steady at adding right around 1% per year vs. the  over 2% seen in Denver.  The only people I can imagine griping about too many moving to GR would be the typical legacy West Michigan person.   The ones who have only ever left the region for an annual pilgrimage to Orlando(possibly Ft. Meyers), and thinks Jesus drives 65 mph in the left lane on the freeway and they should as well.  

Personally I'd love to see GR in the 1.5-2% range going forward, a bit closer to what was seen during the 1990's.  I do think the areas growth is being stifled by the housing shortage.  The positive thing about the growth in GR is that the region is attracting a much more educated base from matured real estate markets as @GVSUChris has pointed out.   This continues to help the region evolve to a more sustainable and diverse educated population base. 

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46 minutes ago, MJLO said:

I know you're speaking hypothetically, but for comparisons sake the Denver Metro area has added over 345,000 people  since 2010.  GR metro just over 70k.   The metro has been steady at adding right around 1% per year vs. the  over 2% seen in Denver.  The only people I can imagine griping about too many moving to GR would be the typical legacy West Michigan person.   The ones who have only ever left the region for an annual pilgrimage to Orlando(possibly Ft. Meyers), and thinks Jesus drives 65 mph in the left lane on the freeway and they should as well.  

Personally I'd love to see GR in the 1.5-2% range going forward, a bit closer to what was seen during the 1990's.  I do think the areas growth is being stifled by the housing shortage.  The positive thing about the growth in GR is that the region is attracting a much more educated base from matured real estate markets as @GVSUChris has pointed out.   This continues to help the region evolve to a more sustainable and diverse educated population base. 

Personally I'd much rather see the jobs market numbers be in the healthy 2%+ range rather than just population growth of 2%+. The suburban growth out here is quite shocking for a "progressive" city.  It's mind-numbingly endless and like nothing in the GR area or even Detroit or Chicago areas. They do have a healthy light rail system but the 2 times we've ridden it since we've been there the trains have been basically empty except homeless people. Maybe they're full at rush hour as we rode at non rush hour times (evening and on a Saturday).  I-25 on the other hand they keep expanding, and it's backed up every time we drive on it between Den and Colo Spgs. 

In other words, I like our growth compared to Denver's. I don't feel like we should be telling anyone to not move to GR. :)

Also, the housing market out here doesn't seem to be much different from GR. Not a lot of homes on the market comparatively speaking to the growth, and all the new neighborhoods have signs that say "From the $450's, From the $700's, from the $900's" etc. for what look like your typical GR suburban home but clad in stucco on a postage stamp lot. The last time I was here 4 years ago the prices didn't seem to be that high. 

We're staying in Lone Tree which we're within walking distance of the Lincoln RTD station. I keep saying it's like the Truman Show though because you rarely see any pedestrians out except early morning dog walkers. 

https://goo.gl/maps/VwKxwQ2TEuL2

It does have this interesting pedestrian bridge over one of the major thoroughfares.

https://www.denverpost.com/2017/08/15/leaf-bridge-a-symbol-of-lone-trees-commitment-to-providing-transportation-options/

I love the fact that there are trails and parks literally everywhere out here and they're used tremendously. 

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Employment growth has gone back to "blistering" for the first 5 months of this year. 

 

 

166684198_GRemployment7-2018.thumb.JPG.bf65a068123456dc8aa8832a5feb2b12.JPG:

Data: https://data.bls.gov/timeseries/LAUMT262434000000003?amp%3bdata_tool=XGtable&output_view=data&include_graphs=true

 

This is an interesting chart, going back to 2002:

 

image.thumb.png.d3ea716f06cf3172fd649ffc59b513d6.png

My prediction: the labor force for the metro area will surpass 600,000 in 2020.  That would put us within striking distance of Hartford, CT as the next metro we'll pass economically.

Other metros with labor forces of 600,000+:

Richmond, Virginia

Memphis, TN

Providence, RI

Oklahoma City

Raleigh

Louisville, KY

Salt Lake City, UT

This is an interesting article too about "full employment." I think we're there with Des Moines (although now about 60% larger than Des Moines):

https://www.theatlantic.com/business/archive/2018/07/hello-full-employment/564527/

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Des Moines seems to be the closest comparison on a lot of levels to GR, and although its metro is smaller they seem to trend slightly above GR in a lot of things. Lets hope this means wages raise here to "catch up" and adjust. I thought Raleigh would be a higher number but maybe that doesnt include Durham/Chaple Hill? 

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Colliers just put out their recent market reports and I always love this graphic of the major downtown office buildings and their vacancies, which downtown/CBD is running right around 10% vacant now (lower than it's been in the last 5 years). 

347999280_downtownofficevacancy.thumb.JPG.652a9f7f1c56326a0b1bdba7766184b8.JPG

 

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The Grand Rapids area in July dropped to its lowest July Unemployment rate in almost 20 years (1999 was lower by a few tenths of a point).

I'm not a fan of the "unemployment" number/percentage though because it's based on a lot of variables (labor force size, participation rate, benefits start/ending, etc) which can skew the number, but the actual labor force in the area is continuing to grow at historic rates (around 583,000 this past July), and non-farm payroll stood at 560,200 in July 2018, or around 21,000 people in the labor force looking for work and not employed. For comparison, in 2010 that number was 61,000 people actively looking for work and not working. 

None of these stats show 1099's who are working, as they don't report to a payroll department. 

https://www.bls.gov/regions/midwest/mi_grandrapids_msa.htm#eag

"Mining, logging and construction" is showing the healthiest gains with 8% more employed over this time last year. 

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On 8/8/2018 at 8:19 AM, GRDadof3 said:

Colliers just put out their recent market reports and I always love this graphic of the major downtown office buildings and their vacancies, which downtown/CBD is running right around 10% vacant now (lower than it's been in the last 5 years). 

347999280_downtownofficevacancy.thumb.JPG.652a9f7f1c56326a0b1bdba7766184b8.JPG

 

That;s a great way of quickly showing vacancy downtown. Nice! I like the tiny sliver on the 10th floor of 171 Monroe. :)

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On 9/2/2018 at 2:21 PM, joeDowntown said:

That;s a great way of quickly showing vacancy downtown. Nice! I like the tiny sliver on the 10th floor of 171 Monroe. :)

Yes, I wonder what suite that is? 

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Job growth (non-farm payroll) back up to 2.9% year over year in September, to 571,600 employed. Unemployment rate will probably come in at 2.7% ish (not reported yet for GR).

16,600 more jobs than in September 2017. 

1182346450_GRgrowth9-2018.thumb.jpg.0ac6ca9ea0b3cca69433361afd5afa43.jpg

 

Other notable cities/metro area comps:

Grand Rapids 2.9%, 571,600

Indianapolis - 2.1%, 1.089 Million employed

Raleigh: 3.3%, 639,600

Buffalo, NY - 1.2%, 574,000

Omaha - 2.2%, 510,000

Louisville, KY - .8%, 675,800

Des Moines - 3.2%, 375,200

Boise ID - 2.8%, 330,200

Jacksonville FL - 4.4%, 714,400

Hartford, CT - 1.4%, 583,200

Denver CO - 2.7%, 1.509 Million

Salt Lake City - 2.9%, 741,500

Richmond VA - 1.4%, 684,400

Milwaukee - .7%, 874,500

Austin TX - 3.9%, 1.072 Million

Memphis - 2.3%, 658,500

Nashville 1.7%, 1.007 Million

Portland OR - 2.3%, 1.206 Million

Oklahoma City - 2.3%, 656,300

Columbus OH - 1.4%, 1.104 Million

Toledo OH - .8, 312,100

Las Vegas 3.2%, 1.020 Million

I didn't click through every metro but it looked like Orlando, FL was the reigning king/queen (of sizable metros) at 5.9% growth in one year to 1.306 Million employed, adding 73,300 jobs in one year (9/2017 - 9/2018). How the heck do you add 73,000 jobs to your economy in one year? 

 

I think not long ago I predicted we would pass Buffalo NY and Hartford CT soon... 

Source for GR data: https://www.bls.gov/regions/midwest/mi_grandrapids_msa.htm#eag

In our next issue, we may delve into the local and national housing market.... ;)  Probably after mid-term elections (as some economists are saying that the run-up is affecting big-ticket purchases). 

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I was having a discussion on another site as to the validity of Grand Rapids having the strongest economy (of large metros) in the Midwest and had to defend myself. :)  Of course the data is there. In addition to job growth, the GDP for the metro area has grown 45% since the recession, to just over $60 BILLION, which puts it on par with COUNTRIES like Panama, Luxembourg, and Costa Rica. You can knock manufacturing all you want but the GDP being kicked out by our local manufacturers is quite admirable and a lot of metros, especially in the South, would love it. 

Other Midwest/Great Lakes metro areas with sizable growth had GDP increases since the recession of: Columbus 42%, Mpls  30% and Indianapolis 29%.   The major metropolitan areas in the Great Lakes like Chicago and Detroit have not had nearly the GDP growth. 

https://fred.stlouisfed.org/series/NGMP24340

1655223101_GRGDP.thumb.JPG.bc31d1f170695eb97c89ca0e1ccf9b55.JPG

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22 hours ago, thebeerqueer said:

Thanks for pointing out the oft-overlooked GDP numbers.

Facts don't lie. 

Poor little GDP!! 

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Because Brian Long primarily surveys purchasing managers (manufacturers mainly), he's usually pretty dower about the overall economy. Surprised to see this report:

 

GRAND RAPIDS – The economic pace for West Michigan was strong in September, but October was even stronger, said Brian G. Long, director of Supply Management Research in Grand Valley State University’s Seidman College of Business.

The current economy is about as good as it gets, Long said. “Hiring and retaining new workers continues to be a big problem for some firms, so we can’t expect much more expansion.”

https://mitechnews.com/featured/gvsu-economist-the-current-west-michigan-economy-is-about-as-good-as-it-gets/

 

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UM economists: Michigan job growth enters longest period since WWII

Breana Noble, The Detroit NewsPublished 9:30 a.m. ET Nov. 16, 2018 | Updated 11:21 p.m. ET Nov. 16, 2018
   
Job Openings

(Photo: Elise Amendola / AP file)

Michigan soon could enter the longest period of job growth since the World War II era, according to economists from the University of Michigan.

"The state has reversed the brain drain seen in the years leading up to the Great Recession when college graduates fled the state for jobs elsewhere. From 2010 to 2017, Michigan saw a 29-percent rise in the number of college-educated 25-to-34-year-olds. Thirteen of the 16 largest cities in the state, especially Detroit and Grand Rapids, are outgrowing the national average rate for young adults with at least a bachelor's degree."

https://www.detroitnews.com/story/business/2018/11/16/university-michigan-economy-michigan-job-growth-record-forecast/2013974002/

 

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I wonder what impact the legalization of marijuana will have on the economy for Grand Rapids. If its anything like it was for Colorado, Michigan could be seeing some good numbers in the future. Maybe we need a "Weed" forum..

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2 hours ago, TheSutterKing said:

I wonder what impact the legalization of marijuana will have on the economy for Grand Rapids. If its anything like it was for Colorado, Michigan could be seeing some good numbers in the future. Maybe we need a "Weed" forum..

Sure, I thought about that the other day.

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Not sure where to put this one.  I guess this might be the best fit:

I just got around to reading it but a couple of weeks ago The Economist ran an article about last year’s federal tax cut legislation creating “opportunity zones.”  If I’m understanding this right, if you invest in these zones you can write off any capital gains you make for ten years.  As you can see by the title of the article, they consider it a boondoggle:

Will opportunity zones work? Or are they just a tax break for America’s wealthiest?

Now The Economist is not some radical hippy publication, it’s a staid old British news magazine started in 1843.  It is definitely well right of center.  The editors seem to be still grumpy about the loss of their empire.  I read it though mostly for the international news.   It is sort of like listening to the BBC.

Anyway, so I got to thinking, are any of these “opportunity zones” around here?  Can we get into this?

The answer is YES!  Here's a map showing the Grand Rapids area "opportunity zones";

  imageproxy.php?img=&key=cfdcdf7370b84370opz.thumb.png.248bbad5bb13caec04a195ea554df449.png

Was anyone aware of this?  Anyone know of anyone thinking about taking advantage of this?

 

Footnotes:

OPPORTUNITY ZONES RESOURCES including how I came up with the map:

GOV: Opportunity Zones

From the IRS: List of “opportunity zone” census tracts by state and county:

IRS: opportunity zones - census tracts

Edited by walker
to fix link

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2 hours ago, walker said:

Not sure where to put this one.  I guess this might be the best fit:

I just got around to reading it but a couple of weeks ago The Economist ran an article about last year’s federal tax cut legislation creating “opportunity zones.”  If I’m understanding this right, if you invest in these zones you can write off any capital gains you make for ten years.  As you can see by the title of the article, they consider it a boondoggle:

Will opportunity zones work? Or are they just a tax break for America’s wealthiest?

Now The Economist is not some radical hippy publication, it’s a staid old British news magazine started in 1843.  It is definitely well right of center.  The editors seem to be still grumpy about the loss of their empire.  I read it though mostly for the international news.   It is sort of like listening to the BBC.

Anyway, so I got to thinking, are any of these “opportunity zones” around here?  Can we get into this?

The answer is YES!  Here's a map showing the Grand Rapids area "opportunity zones";

  imageproxy.php?img=&key=cfdcdf7370b84370opz.thumb.png.248bbad5bb13caec04a195ea554df449.png

Was anyone aware of this?  Anyone know of anyone thinking about taking advantage of this?

 

Footnotes:

OPPORTUNITY ZONES RESOURCES including how I came up with the map:

GOV: Opportunity Zones

From the IRS: List of “opportunity zone” census tracts by state and county:

IRS: opportunity zones - census tracts

I hate to be ol grumpy pants like the Economist but you don't pay capital gains on your primary residence unless it's more than $250,000 profit for single filer or $500,000 for married filling jointly.  I can't imagine any house in those census tracts ever appreciating that much in 10 years. So capital gains tax primarily just applies to investment properties. This Opportunity Zone tax benefit only goes to investment property owners (landlords) which heaven knows I don't think this area needs any more of those. 

This is a really bad tax break that was not needed. If you're a landlord (like me), I'm charging enough rent to be cash-flow-positive enough to make the risk worth my while. If the home goes up in value over the time I own it and go to sell, that's just a bonus (one for which I'll pay capital gains tax on and not complain). 

So investors will flood into these zones and buy up properties (even more than they have been) driving up prices which will in turn drive up rents, forcing people out or at least giving them way less disposable income to spend on local businesses. Making poor people even poorer. I would think even most conservatives would see this as a bad idea. 

 

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1 hour ago, GRDadof3 said:

I hate to be ol grumpy pants like the Economist but you don't pay capital gains on your primary residence unless it's more than $250,000 profit for single filer or $500,000 for married filling jointly.  I can't imagine any house in those census tracts ever appreciating that much in 10 years. So capital gains tax primarily just applies to investment properties. This Opportunity Zone tax benefit only goes to investment property owners (landlords) which heaven knows I don't think this area needs any more of those. 

This is a really bad tax break that was not needed. If you're a landlord (like me), I'm charging enough rent to be cash-flow-positive enough to make the risk worth my while. If the home goes up in value over the time I own it and go to sell, that's just a bonus (one for which I'll pay capital gains tax on and not complain). 

So investors will flood into these zones and buy up properties (even more than they have been) driving up prices which will in turn drive up rents, forcing people out or at least giving them way less disposable income to spend on local businesses. Making poor people even poorer. I would think even most conservatives would see this as a bad idea. 

 

Even though I was trying to present this in sort of neutral way to see what people had to say, you answered it exactly the way I was hoping someone would.  Makes me feel good.  I completely agree and thanks. 

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I am not super educated on this topic. Can anyone share how this is different/similar to the Renaissance zones of the late 90's early 2000's?Am I correct that the Renaissance zones were just tax free for something like 10 years? 

Edited by BLUESCRUBS

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28 minutes ago, BLUESCRUBS said:

I am not super educated on this topic. Can anyone share how this is different/similar to the Renaissance zones of the late 90's early 2000's?Am I correct that the Renaissance zones were just tax free for something like 10 years? 

There was no state income tax for people who lived there, or businesses who operated there (among other perks).  It wasn't necessarily intentional, but RenZones brought about scads of apartment conversions, with lots of high income single people living in them (see: Union Square).   It was probably singly responsible for Wealthy Street as it is today, obviously Union Square, and arguably the new Meijer could even be an offshoot.  I think that tax break worked shockingly well.  This tax break is not as direct.  This break is designed to tempt rich people to stuff their capital next door to poor people, and grow businesses there, but it isn't nearly as aggressive about it as RenZones were in terms of tempting rich people to actually move into impoverished areas.  

Edited by x99

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