Economic outlook shows slower growth for West Michigan

A year-long analysis of the West Michigan economy by a GVSU economist points to a clear trend — growth is slowing.

Paul Isely, associate dean and professor of economics in GVSU’s Seidman College of Business, shared findings from his annual economic outlook during the Grand Rapids Chamber of Commerce’s January 29 meeting, highlighting softer consumer spending, declining manufacturing activity and policy pressures weighing on businesses.

“What’s our word for the year? Slow,” Isely said. “The good news is that slow means we’re still moving forward. We’ll probably speed up as the year goes along, but it’s going to be a slow year.”

Isely cited several key data points that led to his team’s projections. 

New orders for manufacturing firms have dropped to their lowest level since early 2024, contributing to job losses in the sector. 

While other industries — financial, hospitality, construction, government, education and health care — have recorded modest to substantial job gains over the past two years, manufacturing firms in West Michigan have shed 5,000 jobs over the same period, Isely said. Statewide, Michigan has lost 27,000 manufacturing jobs in those two years, he added.

“This is an amazing number because this is some of the highest paid jobs that we have for middle income people, and it's dropping really, really fast,” Isely said.

“A lot of this has to do with government uncertainty around regulations that go with cars and government uncertainty around tariffs.”

The report also identifies broader policy pressures on the West Michigan economy. Tariffs are squeezing profit margins as businesses absorb higher import costs.

“We've been told the other countries are paying the tariffs, so therefore we're collecting money that isn't hurting our economy, but this is simply not true,” Isely said. 

More than half of surveyed firms cited state policies — the increase in minimum wage, the Earned Sick Time Act and other regulations — as barriers to growth.

“The government is slowing business in ways that we’ve never seen before,” Isely said. “Businesses have always complained about regulation, hopping through things and government intrusion, but we've never actually seen it change how businesses invest.” 

As profits shrink, Isely said, more firms are shedding middle management positions and investing in, and relying on, artificial intelligence to maintain productivity.

“AI investment is hiding weakness everywhere else,” Isely said. “In fact, the U.S. economy this year would have been in recession if we took out AI investment.”

Isely projects the region’s economy to see some resilience and slowly emerge this spring and summer. The tax cuts implemented with the Trump administration’s “Big Beautiful Bill,” along with falling interest rates, could spur business investment later this year, Isely said. 

“We have some good markers that there will be some help coming in the second half of the year, and as long as we don't mess it up, that'll be good news,” Isely said. 

“Don't expect great breakneck growth, and there are some substantial downside risks, but right now those don't seem to be coming into play, and we'll be watching for those.”