West Michigan/Grand Rapids Economy

[MJLO]

18 hours ago, GRDadof3 said:

In April, unemployment rate dropped to a 20 year low of 2.5% and the lowest rate in the State. The strange thing is that non-farm employment growth was the slowest rate of growth in about 5 years, with only 4000 jobs added from April 2018. I think the labor shortages are starting to affect employment growth. 

Other thoughts? Is the economy taking a breather or entering a slowdown that everyone has been predicting? 

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

Hard to say.  I don’t know that I agree labor shortages are hampering growth.  I think there are some key sectors that aren’t hiring as ambitiously as they were a few years ago.  

One of the biggest growth drivers over the last 8 years has been automotive manufacturing. For about 4/5 years the tier one, tier two’s were growing like gangbusters and given more new business they could handle.  This  was a big contributor to the job growth at large.  The industry is in a transitional period, and a few big product lines are disappearing.  This is rippling down to the sub tiers now who are adjusting as well.  There are very small (almost unnoticeable) downsizing events happening at automotive firms across the metro.  In the very least  they are eliminating open positions. Laying off 5-10 employees is not going to get an announcement and local media won’t take notice.

 I also think the segmenting  of the former Prince Corp. businesses out in Holland, and Yan Feng’s decision to transition it’s brain trust out of Holland is impacting these numbers as well.    If you look at the growth rates in the developed area’s around Holland, they are lower than those of Grand Rapids and Grand Haven.  The slow parting out of the Prince Empire  has been happening in the last  4 years.  This  has slowed the population growth(I think) but allowed for workers to shift to other jobs and hasn’t produced a shock to the system. 

Plus Spectrum Health is going through a transitional period as well as they shift from Richard Breon’s leadership to Tina Friese-Decker.  They are still growing and hiring but a lot of decisions in quite a few departments are on hold while they work out the direction they are heading.

[GRDadof3]

23 hours ago, MJLO said:

Hard to say.  I don’t know that I agree labor shortages are hampering growth.  I think there are some key sectors that aren’t hiring as ambitiously as they were a few years ago.  

One of the biggest growth drivers over the last 8 years has been automotive manufacturing. For about 4/5 years the tier one, tier two’s were growing like gangbusters and given more new business they could handle.  This  was a big contributor to the job growth at large.  The industry is in a transitional period, and a few big product lines are disappearing.  This is rippling down to the sub tiers now who are adjusting as well.  There are very small (almost unnoticeable) downsizing events happening at automotive firms across the metro.  In the very least  they are eliminating open positions. Laying off 5-10 employees is not going to get an announcement and local media won’t take notice.

 I also think the segmenting  of the former Prince Corp. businesses out in Holland, and Yan Feng’s decision to transition it’s brain trust out of Holland is impacting these numbers as well.    If you look at the growth rates in the developed area’s around Holland, they are lower than those of Grand Rapids and Grand Haven.  The slow parting out of the Prince Empire  has been happening in the last  4 years.  This  has slowed the population growth(I think) but allowed for workers to shift to other jobs and hasn’t produced a shock to the system. 

Plus Spectrum Health is going through a transitional period as well as they shift from Richard Breon’s leadership to Tina Friese-Decker.  They are still growing and hiring but a lot of decisions in quite a few departments are on hold while they work out the direction they are heading.

Good background. And it's not like there's "no" growth, just the growth is slowing from red hot. 

But if basically everyone is working who wants to be working, then you rely on newcomers to the area or transferees for jobs, to grow non-farm employment in the area. And since net domestic migration has averaged 1400 - 2800 a year over the last 5 years, that may not be enough newcomers to keep the 12,000 - 14000 jobs a year (on average) growth that we saw for the last 8 - 9 years.  Every year there are young people/college graduates entering the workforce, but I think generally they just replace the people retiring or leaving the area. The red hot growth of the last 5 - 6 years was absorbing most of the unemployed and underemployed and newcomers to the area. 

This is a trend elsewhere in the country though. I looked at a couple of other markets like Minneapolis, Denver, Indianapolis and many have plateau'd, EXCEPT those metro areas that are seeing a huge influx of newcomers (Texas metros for instance). 

Even Raleigh NC, which tries to poach a lot of Michiganders for technical jobs, has plateau'd. 

[GRDadof3]

Employment growth is definitely slowing in the area, down to .5% over the last year. This trend can be found in several other markets I looked at, like Minneapolis (actually experiencing negative growth), Indianapolis, Denver, Raleigh, much of the East Coast.  Only 3000 jobs were created over the last year locally. The previous year cycle (May 2017 - May 2018), nearly 14,000 new jobs were added.  

I think it's a sign of "full employment." The only markets with healthy employment growth right now are those that are recipients of heavy migration (domestic and international), and all the jobs that go along with adding more housing. 

 

[arcturus]

Recession recovery has kept GDP positive for quite some time with a few down blips and a near 0% rate in Q3 2015.

https://www.advisorperspectives.com/dshort/updates/2019/06/28/q1-gdp-third-estimate-real-gdp-at-3-1-as-expected

I agree with the full employment assessment but wonder if its being capped by jobs going unfilled.    I think I recently read where GRCC just announced a partnership with some employer or job sourcing outfit and imagine they  have other agreements, not unlike other community colleges who are doing the same.    It's stated that job openings within the fastest growing projected employment sectors 10 of 15 won't need college degrees.

Edited June 28, 2019 by arcturus

[Matchetes]

A new study from Rueters showing that 40% of job growth went to 20 superstar cities. Detroit and Grand Rapids were the only superstar cities of the ‘rust belt’ interior

 

https://www.reuters.com/article/us-usa-economy-nashville-insight/as-superstar-cities-thrive-poorer-ones-get-left-behind-idUSKCN1UE13B?utm_source=share&utm_medium=ios_app

 

[GRDadof3]

On 7/21/2019 at 2:43 PM, Matchetes said:

A new study from Rueters showing that 40% of job growth went to 20 superstar cities. Detroit and Grand Rapids were the only superstar cities of the ‘rust belt’ interior

 

https://www.reuters.com/article/us-usa-economy-nashville-insight/as-superstar-cities-thrive-poorer-ones-get-left-behind-idUSKCN1UE13B?utm_source=share&utm_medium=ios_app

 

That's good because June's numbers were even worse than May's, dropping to .2% growth year-over-year. Only 1300 jobs were added from June 2018 - June 2019, which it has been running more than 10,000+ new jobs a year for quite some time. 

I haven't had time to see if this is a national trend, a Midwestern trend, etc.. 

The trend is the same for Michigan as a whole so I wonder if it's declining auto sales:

https://www.reuters.com/article/us-auto-sales/us-auto-sales-seen-slipping-in-july-jd-power-lmc-automotive-idUSKCN1UO21N

 

 

[egrguy]

And real estate is still hot in the GR area. Livonia, Grand Rapids make list of top 10 hottest real estate markets

Wasn't it Kentwood a year ago that made a list like this/or something similar.

[GRDadof3]

22 minutes ago, egrguy said:

And real estate is still hot in the GR area. Livonia, Grand Rapids make list of top 10 hottest real estate markets

Wasn't it Kentwood a year ago that made a list like this/or something similar.

Yes, real estate is definitely still hot, and homes in the zip code 49505 that made this list do go fast with some homes getting 20 - 30 offers. It's essentially Creston/Cheshire/Riverside Park. I do seem to remember Kentwood making a similar list. 

[MJLO]

1 hour ago, GRDadof3 said:

That's good because June's numbers were even worse than May's, dropping to .2% growth year-over-year. Only 1300 jobs were added from June 2018 - June 2019, which it has been running more than 10,000+ new jobs a year for quite some time. 

I haven't had time to see if this is a national trend, a Midwestern trend, etc.. 

The trend is the same for Michigan as a whole so I wonder if it's declining auto sales:

https://www.reuters.com/article/us-auto-sales/us-auto-sales-seen-slipping-in-july-jd-power-lmc-automotive-idUSKCN1UO21N

Yes - Regional automotive suppliers have been scaling back hiring, and eliminating open positions for about 18 months now.  Over the last 6 months they have been cutting excess staff.  These events are happening at multiple firms and are in the 10-20 range(almost exclusively salaried) so they aren't getting reported.  A lot of W. Mich tier 1's, 2's had quite a bit of volume in the domestic sedan's that are being phased out.  This is where most of this impact is coming from.  I would expect it to level out soon.  Spectrum is also in a hiring freeze with hundreds of positions unfilled at the moment which I am assuming is having an impact on these numbers as well.  I would expect to see that activity resume in Q1 of 2020 though.

[Guest]

Some of us 30-somethings that want to buy homes are actually looking forward to a housing slowdown and/or recession  

[54equalsunity]

Some of us 30-somethings that want to buy homes are actually looking forward to a housing slowdown and/or recession [emoji4] 

You can say that again! I keep trying to figure how long I'll have to rent for before I can muster up enough for a house in decent shape in a walkable neighborhood (nothing else will do). It's a double edged sword for me, though... West Michigan is NOT good for pharmacist jobs right now.

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[GRDadof3]

20 hours ago, 54equalsunity said:

You can say that again! I keep trying to figure how long I'll have to rent for before I can muster up enough for a house in decent shape in a walkable neighborhood (nothing else will do). It's a double edged sword for me, though... West Michigan is NOT good for pharmacist jobs right now.

Sent from my Pixel 2 using Tapatalk
 

You probably need to adjust your definition of "walkable" or you'll be waiting a decade+. Not joking. And homes will be $100k more. New home developments in the area have slowed tremendously which puts more pressure on existing homes. We bought/built our first home way out in Hudsonville in the late 90s and made a fortune on it when we sold 4 years later. Afforded us the opportunity to buy in an area we loved, which we never could have saved enough in those 4 years. Just sayin if you chase "cool" when it comes to housing you'll end up broke. 

[Guest]

Yeah it's a tight market for sure. For me, I'd rather live in the city or way out in the middle of no where with at least a few acres.

Less than $150k is what I could probably afford, maybe more like $120.  Baxter would be my ideal neighborhood, but homes around there have gone up a lot.  It looks like S/SW of there would probably be my best bet.  Burton Heights has some nice older homes too.  It blows my mind looking at price histories on Zillow.

One good thing about the housing market being so tight is a lot of homes in neighborhoods have seen some great improvements.

[GRLaker]

On 8/1/2019 at 9:10 AM, MJLO said:

Yes - Regional automotive suppliers have been scaling back hiring, and eliminating open positions for about 18 months now.  Over the last 6 months they have been cutting excess staff.  These events are happening at multiple firms and are in the 10-20 range(almost exclusively salaried) so they aren't getting reported.  A lot of W. Mich tier 1's, 2's had quite a bit of volume in the domestic sedan's that are being phased out.  This is where most of this impact is coming from.  I would expect it to level out soon.  Spectrum is also in a hiring freeze with hundreds of positions unfilled at the moment which I am assuming is having an impact on these numbers as well.  I would expect to see that activity resume in Q1 of 2020 though.

Odd that Spectrum is in a hiring freeze considering the economy and they consistently are profitable. 

[MJLO]

Just now, GRLaker said:

Odd that Spectrum is in a hiring freeze considering the economy and they consistently are profitable. 

From what I understand it has to do with them changing their accounting cycle.  They are in a stub year for the next six months which is creating some difficulties.  Also changes to the insurance laws means they will be capturing less revenue in the future.  These are all preemptive moves.  If you recall a couple of weeks ago Bronson had to lay off some staff.  I am told they were not as proactive.  But this is not my area of focus so my understanding is secondary or crude at best.

[d8alterego]

Hello West Michiganians. It has been a very long time since I last commented on the GR UP forum but I have stopped by on occasion to catch up on new developments. I am very proud of GR and I miss living there. However I recently read an article by CityLab that confused me: 

"To provide context, we do a rough comparison of these 50 cities to America’s 53 large metros (with more than 1 million people). We exclude two metros, Charlotte and Grand Rapids, Michigan, because they experienced significant boundary changes that would have affected their results; that leaves a comparison group of 51."

CityLab

I'm curious as to how the Grand Rapid's city boundary changed. Was land annexed recently by the city? 

Edited August 22, 2019 by d8alterego

[MJLO]

They are talking about cities at a metro level.  Grand Rapids city hasn’t had a boundary change since at least the 1990s.  GRs metro was realigned in 2013 to include Ottawa county again thereby bumping it up about 20 spots in the rankings.  My assumption would be that their methodology wasn’t able to account for the realignments and that adding a 280k person county in would have dramatically skewed results for GR.  (Which would be dumb because they could have just run the study for the same time frame using the current alignment)

[RegalTDP]

56 minutes ago, MJLO said:

They are talking about cities at a metro level.  Grand Rapids city hasn’t had a boundary change since at least the 1990s.  GRs metro was realigned in 2013 to include Ottawa county again thereby bumping it up about 20 spots in the rankings.  My assumption would be that their methodology wasn’t able to account for the realignments and that adding a 280k person county in would have dramatically skewed results for GR.  (Which would be dumb because they could have just run the study for the same time frame using the current alignment)

That is dumb, especially since the census updates their data after redrawing the lines.  The 2010 census with the old MSA (that excluded Ottawa County) had about 774,000 people.  After the new MSA (w/Ottawa) came out in 2013, they updated the previous years' figures:

All they had to do was check census.gov.

[MJLO]

1 hour ago, RegalTDP said:

That is dumb, especially since the census updates their data after redrawing the lines.  The 2010 census with the old MSA (that excluded Ottawa County) had about 774,000 people.  After the new MSA (w/Ottawa) came out in 2013, they updated the previous years' figures:

All they had to do was check census.gov.

Well from the brief glance I had at the study, they were looking at multiple points of data not just raw population increases.  Economic data from the prior alignment may be more difficult to calculate which is probably where the skew comes from.

[RegalTDP]

6 minutes ago, MJLO said:

Well from the brief glance I had at the study, they were looking at multiple points of data not just raw population increases.  Economic data from the prior alignment may be more difficult to calculate which is probably where the skew comes from.

Ah!  That makes sense.

[mpchicago]

Knoll is closing up shop in Kentwood.  The facility was once the world headquarters of Westinghouse Furniture Systems.  In 1990 Westinghouse merged with Knoll, eventually taking on the name Knoll for all operations, and over time cut back production in Grand Rapids.  They are eliminating the last 200 jobs that are left.   Sad to see.

https://knoll.gcs-web.com/news-releases/news-release-details/knoll-inc-announces-closure-grand-rapids-manufacturing-facility

Back in 1984 President's Reagan and Ford visited after an expansion of the complex. 

 

Edited January 17, 2020 by mpchicago

[GRDadof3]

On 1/17/2020 at 12:05 PM, mpchicago said:

Knoll is closing up shop in Kentwood.  The facility was once the world headquarters of Westinghouse Furniture Systems.  In 1990 Westinghouse merged with Knoll, eventually taking on the name Knoll for all operations, and over time cut back production in Grand Rapids.  They are eliminating the last 200 jobs that are left.   Sad to see.

https://knoll.gcs-web.com/news-releases/news-release-details/knoll-inc-announces-closure-grand-rapids-manufacturing-facility

Back in 1984 President's Reagan and Ford visited after an expansion of the complex. 

 

 

Oh man! I've been in that plant several times. It was so "futuristic" with tubular tour cars to take visitors around the plant. 

Even the front entrance was a "tube" airlock.

[wingbert]

An interesting collection of stories.  Apparently, Grand Rapids didn’t make the cut...

“Much of the attention generated by the current U.S. commercial building boom has been focused on major metro areas like New York City, Chicago, Los Angeles, Washington, D.C., and San Francisco. However, a great deal of construction work is also underway in smaller — but no less developmentally active — parts of the country.

Over a period of five days, Construction Dive will highlight the five most up-and-coming U.S. markets for commercial construction, based on input from Dodge Data & Analytics, industry experts and association leaders. These mostly Midwestern cities are enjoying an influx of new residents, driven by booming job markets and a low cost of living.

Construction Dive's 'mini megacities' to watch: Omaha, Nebraska

Construction Dive's 'mini megacities' to watch: Rochester, Minnesota

Construction Dive's 'mini megacities' to watch: Cedar Rapids, Iowa

Construction Dive's 'mini megacities' to watch: Nashville, Tennessee

Construction Dive's 'mini megacities' to watch: Columbus, Ohio”

[WMrapids]

Since I didn’t see this here

https://www.woodtv.com/news/grand-rapids/w-mi-economic-forecast-predicts-slowing-growth/
 

Main concerns are:

• Lack of workers

• Upcoming elections

• Decline in manufacturing

[GRDadof3]

Here's an interesting set of data from November and December 2019.

Figure this head scratcher out...

Non-farm payroll employment DROPPED for the first time since 2008. ie employers had fewer payroll "JOBS" than that same period last year.

Yet the labor force (people participating in the labor pool) grew to its highest number ever. And unemployment dropped to 2.3%. The number of people on unemployment was the lowest since 2000.

So if there are fewer payroll jobs, and more people participating in the labor force, wouldn't that make the unemployment rate go up? 

 

The bottom graph key is:  Labor Force,                     Employment,                                    Unemployed,                     Unemployment Rate