GRDadof3

West Michigan/Grand Rapids Economy

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Well that's an interesting stat:

 

Among Michigan's top 10 counties for jobs growth during that period, two West Michigan counties – Ottawa and Kent – added more jobs than the next eight combined.

 

http://www.mlive.com/politics/index.ssf/2015/05/jobs_flooding_to_west_michigan.html

 

 

Of course the article has to dive into the size comparisons of Oakland County to Kent County, and the economic output comparison of both. "Sorry West Michigan, we won't ever say 'good job!'" - The Rest of Michigan

 

Grand Rapids is becoming the next "Raleigh" of Michigan and people in Southeast Michigan are arguing that they drive bigger cars than us. :) 

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Grand Rapids MSA (old MSA definition) came in 12th place in mid-sized metros in this interesting study done by American Institute for Economic Research, of Employment Destinations for college grads. 

 

Methodology/background:

 

https://www.aier.org/research/top-job-destinations-college-graduates

 

https://www.aier.org/sites/default/files/Files/edi/2015/2015_Grand_Rapids.pdf

 

The study set off a flurry of listicles:

 

http://www.huffingtonpost.com/2015/05/12/best-cities-for-grads_n_7242742.html

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April's unemployment hit 3.3%, lowest in 15 years. Employment levels continue to grow at about a 4% rate annually, which is putting Grand Rapids in the 2nd to 10th best metro area for job growth (depending on the source). 

 

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

 

 

http://www.grbj.com/articles/82445-grand-rapids-ranks-no-2-in-us-for-finding-employment

 

I've actually noticed that companies along 131 are erecting signs on their properties saying they are hiring and "looking for talent!" Growing up in Michigan I haven't known what it's like to live in a fast growing jobs market. :)

 

 

THIS is a really awesome data gathering and interactive map of the country's jobs markets, and which MSA's have come out of the recession the strongest, done by the Brookings Institution. Grand Rapids comes in at #10 for post-recession job growth (it had fallen to the 76th spot during the recession). 

 

1. Austin- Round Rock - San Marcos TX

2. Houston - Sugarland - Baytown TX

3. Dallas - Ft Worth - Arlington TX

4. San Antonio - New Braunfills TX

5. Oklahoma City OK

6. Provo - Orem UT

7. Denver - Aurora - Bloomfield CO

8. San Jose - Sunnyvale - Santa Clara CA

9. Nashville - Davidson - Murfreesburo - Franklin TN

10. Grand Rapids - Wyoming MI

11. McAllen - Edinburg - Mission TX

12. Columbus OH

13. El Paso TX

14. Raleigh - Cary NC

15. Salt Lake City UT

 

http://www.brookings.edu/research/interactives/metromonitor#/M24340

(be sure to set the little drop downs on each map at "Recession+Recovery")

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I remember seeing people standing on street corners in the mid-late 90's advertising job openings. Maybe we'll see that again?

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April's unemployment hit 3.3%, lowest in 15 years. Employment levels continue to grow at about a 4% rate annually, which is putting Grand Rapids in the 2nd to 10th best metro area for job growth (depending on the source). 

 

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

 

 

http://www.grbj.com/articles/82445-grand-rapids-ranks-no-2-in-us-for-finding-employment

 

I've actually noticed that companies along 131 are erecting signs on their properties saying they are hiring and "looking for talent!" Growing up in Michigan I haven't known what it's like to live in a fast growing jobs market. :)

 

 

THIS is a really awesome data gathering and interactive map of the country's jobs markets, and which MSA's have come out of the recession the strongest, done by the Brookings Institution. Grand Rapids comes in at #10 for post-recession job growth (it had fallen to the 76th spot during the recession). 

 

1. Austin- Round Rock - San Marcos TX

2. Houston - Sugarland - Baytown TX

3. Dallas - Ft Worth - Arlington TX

4. San Antonio - New Braunfills TX

5. Oklahoma City OK

6. Provo - Orem UT

7. Denver - Aurora - Bloomfield CO

8. San Jose - Sunnyvale - Santa Clara CA

9. Nashville - Davidson - Murfreesburo - Franklin TN

10. Grand Rapids - Wyoming MI

11. McAllen - Edinburg - Mission TX

12. Columbus OH

13. El Paso TX

14. Raleigh - Cary NC

15. Salt Lake City UT

 

http://www.brookings.edu/research/interactives/metromonitor#/M24340

(be sure to set the little drop downs on each map at "Recession+Recovery")

So Jeff-Seeing as how you are in the industry and so am I (somewhat) this data brings to mind several conversations I have been engaged in over the past couple of weeks.  We are seeing housing prices rise at a pretty good clip here in Kent County.  I am repeatedly being asked, "are we headed for another housing bubble?"  My answer has been NO.  Or at least not in the foreseeable future.  Current underwriting criteria, oversight and regulations regarding appraisals, significant lack of inventory, along with a stable and growing economy (as further evidenced by the unemployment numbers) means we are going to see this last for a bit.  Plus I do not see prices going up too high too quick.  That being said I know of a house in a SE side neighborhood that one would have NEVER thought would have value get listed a couple weeks ago for $159,800 and by days end the seller accepted an offer for $25K over asking...so there is that...

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So Jeff-Seeing as how you are in the industry and so am I (somewhat) this data brings to mind several conversations I have been engaged in over the past couple of weeks.  We are seeing housing prices rise at a pretty good clip here in Kent County.  I am repeatedly being asked, "are we headed for another housing bubble?"  My answer has been NO.  Or at least not in the foreseeable future.  Current underwriting criteria, oversight and regulations regarding appraisals, significant lack of inventory, along with a stable and growing economy (as further evidenced by the unemployment numbers) means we are going to see this last for a bit.  Plus I do not see prices going up too high too quick.  That being said I know of a house in a SE side neighborhood that one would have NEVER thought would have value get listed a couple weeks ago for $159,800 and by days end the seller accepted an offer for $25K over asking...so there is that...

 

 

I think some areas may see mini-bubbles, especially areas that are attracting a lot of out-of-state or out-of-town investors. Rapidly rising prices can't go on forever, and they'll correct (houses will begin to stay on the market longer in those areas, or homes will go un-rented).

 

As far as the metro area though, I don't foresee a bubble. New construction activity is still far below where it was in the early 2000's. This is a national trend actually. So demand is outstripping supply in most of the country. If Grand Rapids keeps adding 20,000 jobs a year, that will cause a continuing constricted market. You'll start to see homes being bought and fixed up in areas that haven't seen investment in 50 years. 

 

I know someone who put up a townhouse for sale in Sparta (of all places) at $30,000 over what they paid and they got 7 showings and 5 offers in 3 days. 

 

Construction labor and material charges are rising, and I see builders probably getting away from the fine finishes they've been doing over the last 5 years. Or more "affordable" new home builders cropping up, like Mayberry Homes which is a statewide builder that just entered the market. 

 

We'll probably have a correction in 3 - 5 years but I don't think it will be like 2006 - 2009. Money is still not as free flowing as it was previously.

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I take it back,  http://fortune.com/fortune500/2013/nash-finch-company-500/ Nash Finch was #500 exactly in 2013.   Together the two companies have over 7billion in revenue.   Look for Spartan Nash to be in the Fortune 400-500 range in 2015 

 

Just in case anyone was curious, Spartan Nash made the list at 359.  I underestimated it's spot.   GR officially has a fortune 500 presence again.  Of course if Amway, Meijer and Gordon Foods were public it would have 4, as Spartan has less revenue than all 3.

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And bam just like that, GR's MSA employment surpasses Rochester New York's for the first time in history.

 

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

 

538,000 employed and a 4.1% increase over this time last year (a 3.0% annual growth rate is considered "excellent."). 12,000 workers added just in the month of May. 

 

Other peer cities:

 

Omaha, NE 494,600 1.0% growth rate

Birmingham AL: 522,000 2.0% growth rate

Rochester: 536,400, 1.3% growth rate

Grand Rapids: 538,000 4.1% growth rate

New Orleans: 566,000 0.0% growth rate

Raleigh, NC: 575,800 3.0% growth rate

Providence, RI: 583,400 1.8% growth rate

Memphis TN: 621,000 1.0% growth rate

Richmond VA: 636,000 0.4% growth rate

Salt Lake City: 678,000 3.9% growth rate

 

*This is for metro area (MSA), not city of GR

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That's quite an impressive growth rate.  Year-over-year lists have to be looked at with the proper perspective because they often compare one place coming off a bad year against places that had a high growth rate during the previous year.  But that's not the case this time since Grand Rapids had a good year last year if IIRC.

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That's quite an impressive growth rate.  Year-over-year lists have to be looked at with the proper perspective because they often compare one place coming off a bad year against places that had a high growth rate during the previous year.  But that's not the case this time since Grand Rapids had a good year last year if IIRC.

 

The growth rate has been steadily holding around 2.5 - 3.0% year-over-year, but seems to have accelerated this year. There has been a slew of company expansion announcements this spring so I don't see it slowing down any time soon. 

 

If another 22,000 jobs are added over the next year to May 2016, like this past year, it will put GR at the same size as New Orleans. 

 

The little "dips" are because GR has a lot of seasonal employment, and a large college student population (a lot of college students leave the workforce during school year and return to the workforce over the summer). 

 

What's really interesting is that employment bottomed out in July of 2009 at 437,000 employed, basically 100,000 fewer employed than today. 

 

18802302149_6988c22351_c.jpg

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What gave May such a large bump?   Is it seasonal due to the start of summer?  

 

Also the job growth for the labor market has started to outpace perennial golden children like SLC and Raleigh.  Is this a sign of a changing economy?  Or is this an inflated increase because of the areas still strong manufacturing presence?  When I was in college one of my economics professors said that in good economic times Michigan (and Grand Rapids in particular)  did 5% better than the rest of the country.  In bad economic times it did 5% worse.   That always stuck with me.  What is different now, from when that statistic was put in my brain 15 years ago?   I love this relentless onslaught of economic news but how can we be sure that it's not the same bubble?

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I would hope the increase is in technical, medical, education, etc. jobs rather than manufacturing.  Otherwise the 5% fluctuation may still hold true.  

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The increases are across the board every sector, the economy has been diversifying for a while.  It's still undeniable that the auto parts supplier base in Grand Rapids has been growing at a breakneck pace.   They have more business than they can handle, and not enough employees to keep up with it.  I don't know what the breakdown of the employment base is currently, but it feels like the auto suppliers have over taken the furniture makers as the silent majority (especially when you add Ottawa County to the labor market).  Even with that growth comes a shortage of educated STEM workers so you can't say it's JUST manufacturing. It would be interesting to see the breakdown of where the majority of those jobs come from.

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The increases are across the board every sector, the economy has been diversifying for a while.  It's still undeniable that the auto parts supplier base in Grand Rapids has been growing at a breakneck pace.   They have more business than they can handle, and not enough employees to keep up with it.  I don't know what the breakdown of the employment base is currently, but it feels like the auto suppliers have over taken the furniture makers as the silent majority (especially when you add Ottawa County to the labor market).  Even with that growth comes a shortage of educated STEM workers so you can't say it's JUST manufacturing. It would be interesting to see the breakdown of where the majority of those jobs come from.

 

You can look at this table and go right down the sectors and their growth rates:

 

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

 

5000 of that 12,000 jump in May was in manufacturing, but manufacturing is not as large of a sector here. It was 25% of the workforce back in 2000, and is 19.8% today.  

 

Your economics professor had it right in a sense. When manufacturing jobs grow, they have huge multipliers. Every new manufacturing job tends to produce 3 to 4 spinoff jobs. Professional service job growth only has a 1 or 2 multiplier. That historically has helped Michigan and West Michigan. We might be seeing some of that now, yet at the same time, professional services and education and health services are skyrocketing. If you add those two together at 170,000 workers, that's far more now than the 107,000 manufacturing workers. 

 

The Freep picked up the growth story on Friday:

 

http://www.freep.com/story/news/local/michigan/2015/06/20/grand-rapids-economic-growth/29024917/

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#3 in the country, via Area Development Magazine (reported by the Right Place):

 

http://www.areadevelopment.com/Leading-Locations/Q2-2015/Leading-Metro-Locations-Full-Results-4433916.shtml

 

I think this one is a bigger deal than most of the best-of lists—it's a trade publication for the industry devoted to scoping out sites for companies to expand. This might help to put us on a few more radars.

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I think this one is a bigger deal than most of the best-of lists—it's a trade publication for the industry devoted to scoping out sites for companies to expand. This might help to put us on a few more radars.

 

But will it hurt the perception expanding companies have if they think there are already not enough workers?

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But will it hurt the perception expanding companies have if they think there are already not enough workers?

 

I think you worry too much. :) 

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Most definitely :)

 

Knowing is half the battle. :)

 

Truth: there will be another recession in the next 10 years. Hopefully it won't be as bad as the last one, which I don't expect it to be. The runup/bubble before the last one was humongous, especially the home building and mortgage industry, which today isn't even half the levels it was pre-2006/07. 

 

The trick is to figure out where to position yourself to take advantage of the current market. 

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I've heard many times the next bubble to burst will likely be student loans, but I'm not sure what kind of effect that would have on the economy.  I'm no economist.

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I don't see how there can be a student loan bubble to burst.  sure there are a lot of them but there isn't a market, at least at the consumer level, to crash.  a crash is usually due to mass selling of something but I don't see how that is going to happen.  there may be a increased level of defaults but this doesn't seem like it would happen all at once since one persons inability to pay for a loan isn't directly related to another person's.  

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Knowing is half the battle. :)

 

Truth: there will be another recession in the next 10 years. Hopefully it won't be as bad as the last one, which I don't expect it to be. The runup/bubble before the last one was humongous, especially the home building and mortgage industry, which today isn't even half the levels it was pre-2006/07. 

 

The trick is to figure out where to position yourself to take advantage of the current market. 

you have the ability to predict the future?  where is your source for this?  While there will undoubtedly be another recession/depression, predicting one in 5, 10, or 20 years is fool-hardy at best.  typically the stock market has revolved around 15-20 year cycles alternating between bull and bear markets.  we should be trading sideways at this point so the recent run up of the market defies historical trends although I would hardly say that historical trends have reached a level of statistical significance.  I guess this is why I generally avoid the stock market except for my 403b.  it's fool's gold.

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you have the ability to predict the future?  where is your source for this?  While there will undoubtedly be another recession/depression, predicting one in 5, 10, or 20 years is fool-hardy at best.  typically the stock market has revolved around 15-20 year cycles alternating between bull and bear markets.  we should be trading sideways at this point so the recent run up of the market defies historical trends although I would hardly say that historical trends have reached a level of statistical significance.  I guess this is why I generally avoid the stock market except for my 403b.  it's fool's gold.

The US has a recession every 5 to 10 years, so there's no reason to believe that we won't have another one in the next 5 to 10. Humans are still human, economies still fluctuate. In fact, we've had about 5 years of expansion, so probably within 5 years.

I wasnt talking about the stock market.

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The US has a recession every 5 to 10 years, so there's no reason to believe that we won't have another one in the next 5 to 10. Humans are still human, economies still fluctuate. In fact, we've had about 5 years of expansion, so probably within 5 years.

I wasnt talking about the stock market.

I'm not sure what you are talking about if you don't include the stock market.  almost by definition a recession includes the stock market. I took the liberty of copying and pasting it below.  if you are referring to a minor market correction then that is something different altogether.  

 

re·ces·sion

rəˈseSH(ə)n/
noun
 
  1. 1
    a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

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