GVSU economist: confidence in local economy begins to rebound
Posted on January 15, 2010
GRAND RAPIDS, Mich. — Confidence in the greater Grand Rapids economy is higher than it has been in two years — but is still at a historic low, according to an annual benchmark survey by Grand Valley State university economist Hari Singh.
All indicators signal a turnaround and modest growth in 2010, but the regional economy is still feeling the effects of nearly a decade of turbulence.
"West Michigan had not recovered completely from the 2001 recession when the Great Recession further depressed economic activity," Singh said. "Expectations are still depressed, but the overall outlook is beginning to take a positive turn. There is some sense that the worst is over and the regional economy will start the long process of improvement."
Singh, a professor in the Economics Department in Grand Valley’s Seidman College of Business, unveiled his annual economic forecast for the regional economy on January 15. The survey includes business leaders from Kent, Ottawa, Muskegon, and Allegan counties. The survey was conducted in November 2009 across sectors. The respondents use a scale from zero percent (no confidence at all) to 100 percent (complete confidence). This year's business confidence index is poised to rise above 50 percent for the first time in 2 years. NOTE: The full report can be downloaded here [PDF].
According to the survey, employment is expected to increase marginally by one half of one percent in 2010. Singh noted that the Grand Rapids area has lost 31,900 manufacturing jobs in the last nine years but gained 3,600 jobs in education and 13,900 in the health sector over the same period. Overall nominal sales are expected to grow by almost 1 percent this year. Exports continue to be a bright spot with expected growth of 8 percent during 2010.
"West Michigan will continue to find a foothold by diversifying away from manufacturing into specialized services such as health care, professional services and education," Singh said. "In spite of difficult times, the state needs to ensure that it will create a highly qualified workforce for the future."
Not only does Michigan need to educate workers, though. Singh added that Michigan needs to keep that skilled workforce in the state. "The single best indicator of Michigan's success in the long run will be how our young skilled workers vote with their feet," Singh said. "If we see a significant number of our graduates leave the state, that would be a bad omen. But if we can retain our skilled labor force, we will have weathered this turbulent decade without a serious setback.