Solid growth expected for West Michigan economy, business leaders optimistic, says economics professor
Improving business confidence, along with strong employment growth and sales growth, are expected for the West Michigan economy in 2021, said Paul Isely, associate dean and professor of economics in the Seidman College of Business at Grand Valley State University.
Isely unveiled his benchmark survey of the regional economy January 14, during the 2021 West Michigan Economic and Commercial Real Estate Forecast - Virtual Event, cosponsored by Colliers International.
Data shows 2021 will provide a strong comeback from the COVID-19-driven recession for both the West Michigan and U.S. economy, with much of that growth occurring in the second half of the year, Isey said.
“We have 48 percent of firms saying they are going to be back to pre-COVID times by the middle of 2021. But, we have more than 20 percent saying they will not be there by the end of the year,” said Isely. “So, we see the sense of haves and have-nots in the economy, and that is being driven by how the fear or danger of the virus has affected their individual businesses.”
There are sectors of the economy that are still in recession, said Isely, particularly anything dealing with the hospitality industry. “We have parts of the economy that are just being devastated, but we have other parts of the economy, such as real estate, where people are buying houses as fast as they were before,” he said.
Two sectors of manufacturing in Michigan will likely still face headwinds: aerospace and the office furniture industry. Isely added that one-in-five jobs in Michigan is still directly or indirectly related to the automotive sector and the fact that automotive came back so quickly and so strongly means Michigan will continue to move forward.
Over the year following COVID-19’s first effects on the U.S. economy, which began in March of 2020, Isely said the federal government is expected to pump a total of about $3 trillion into the economy. “This has minimized the negative economic effects of COVID-19 and has set the economy up for a fast recovery,” he said.
Key findings for 2021:
The Current Business Confidence Index for 2020 is 72.7 percent, higher than during the last two recessions;
The Forecast Business Confidence Index for 2021 is 73.9 percent, showing improved expectations for 2021;
Employment is expected to grow by 2.3 to 3.9 percent in 2021, showing a strong improvement over the end of 2020;
Overall nominal sales are expected to increase by 1.1 to 2.0 percent for 2021, reflecting slower growth than was anticipated at the beginning of 2020;
Exports are expected to be flat in 2021;
All indicators signal the West Michigan economy will show solid growth in 2021 after the 2020 recession.
The economic survey of the greater Grand Rapids economy (Kent, Ottawa, Muskegon and Allegan counties) was conducted in November and December of 2020. The survey was mailed to nearly 1,000 organizations based on a representative sample reflecting different sectors of the regional economy and the geographic diversity of the area.
The West Michigan economic survey was conducted by Isely, along with staff members from the West Michigan Regional Small Business Development Center, housed in the Seidman College of Business.