GVSU economics expert: Slow recovery begins

Although local economic statistics for May are negative, it now appears the worst of the COVID-19 driven recession is over and the recovery has begun, said Brian G. Long, director of Supply Management Research in Grand Valley State University's Seidman College of Business.

Long surveyed local business leaders and his findings below are based on data collected during the last two weeks of May. 

The survey's index of business improvement (new orders) edged up to -32 from -45. In a similar move, the production index recovered to -35 from -48. The index of purchases reduced its loss to -32 from -44, and the employment index edged up to -38 from -41.

"Many of our survey participants are still working from home or working on a reduced office-sharing schedule," said Long. "Many of our supply chains have been shaken, and restarting production will not be easy. As businesses around West Michigan continue to reopen, we can expect next month's statistics to continue to slowly improve."

Long said many analysts are thanking internet sales for saving the auto industry from total ruin; he said although May sales are significantly lower than in May 2019, the drop was not nearly as steep as some had expected.

Unemployment stats statewide are among the worst ever recorded, said Long. Of the 83 counties in Michigan, the estimated unemployment rate ranged from 14.5 percent to 41.2 percent. Ottawa County, which often boasts the lowest rate in the state, came in at 21.2 percent. Kent County was close behind at 21.6 percent. 

Long said barring a relapse in the fall, history will record either March or April as the bottom of the 2020 Recession. 

"We can expect some additional improvement in next month's report," he said. "We do not consider a recession to be over until we return to full employment, which took about seven years for the complete recovery from the Great Recession." 

The Institute for Supply Management survey is a monthly survey of business conditions that includes 45 purchasing managers in the greater Grand Rapids area and 25 in Kalamazoo. The respondents are from the region's major industrial manufacturers, distributors and industrial service organizations. It is patterned after a nationwide survey conducted by the Institute for Supply Management. Each month, the respondents are asked to rate eight factors as "same," "up" or "down."

For more information, contact Brian Long at (269) 870-0428.