GVSU expert: West Michigan economy slightly better but still flat
In West Michigan and across the country, supply chain problems have resulted in longer lead times, missed deliveries, higher prices and sometimes exorbitant expediting charges, said Brian G. Long, director of Supply Management Research in the Seidman College of Business at Grand Valley State University.
Long surveyed local business leaders and his findings below are based on data collected during the last two weeks of October.
“What seems most worrisome to some of our survey participants is that there is still no end in sight for our supply chain problems. Although these supply chain gremlins are inhibiting the West Michigan economy, modest economic growth continues,” Long said.
Most automotive manufacturers are extremely frustrated by the fact they cannot build or ship most of their cars because of a shortage of $15 worth of computer chips, Long said.
“Throughout the chip crunch, automakers have prioritized output of large pickups, some of the industry's most profitable vehicles,” he said. “Ford and Ram are among automakers offering zero percent financing for 72 months on large pickups. At the same time, competition in the segment is increasing with a redesigned Toyota Tundra and the industry's first electric pickup, the Rivian R1T, on the horizon.”
Addressing inflation, Long said the Federal Reserve is still sticking with its theory that the current inflation is “transitory.”
“They won’t say how long before we can expect to ‘transition’ out of the high inflation we are currently experiencing,” he said.
Highlights of Long’s October report:
- The Index of Employment remained positive at +24, down from +27.
- New orders, or the Index of Business Improvement, rose to +15 from +8.
- The Production Index, or output, rebounded sharply to +19, up from -1.
- The Index of Purchases eased to +8 from +14.
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.