GVSU economist predicts local growth for 2018; shallow recession in 2019
Posted on January 17, 2018
Paul Isely, professor of economics and associate dean in the Seidman College of Business at Grand Valley State University, unveiled his annual benchmark survey of the regional economy and predictions for 2018 at an event January 17.
For the past decade, employers have used Isely's historically accurate findings to guide their business decisions.
Isely presented his findings January 17, during the 2018 Colliers Annual West Michigan Economic and Commercial Real Estate Forecast event at DeVos Place in downtown Grand Rapids. The full report can be found here: http://gvsu.edu/s/0CI
The economic survey of the greater Grand Rapids economy (Kent, Ottawa, Muskegon and Allegan counties) was conducted in November and December of 2017.
Isely said West Michigan's economic strengths in 2018 will create a bottleneck for 2019.
"What we’re really looking at in 2018 is a year that will probably be a little bit stronger than 2017 was nationwide," he said. "Sales will be stronger here in West Michigan, but those things will start to create constraints in finding workers, finding materials and finding space to work. All of those things will lead to an increased chance of a recession as we get into 2019."
Isely said the next recession will be a shallow recession. "It won't be anything like what we experienced in 2007 through 2009, not even close," he explained. "It will probably be a little bit more like what we saw in the early '90s or the early 2000s. And, it will not be broad-based, meaning things like residential construction probably won’t feel it because we have a backlog."
Isely said although there is a slowdown in the expected growth in employment for 2018, the number of firms expecting to hire this year continues to increase. He said about 75 percent of those being hired are expected to be permanent jobs.
Export growth is expected to increase slightly for the first time in three years, reflecting growing strength in the global economy and that West Michigan firms are starting to be optimistic about exports again.
Overall findings for 2018:
• The Current Business Confidence Index for 2017 was 80.5%, a small improvement from 2016;
• The Forecast Business Confidence Index for 2018 is 80.3%, almost identical to the expectations for 2017;
• Employment is expected to grow by 1.1-1.5% in 2018, almost half the rate seen in 2017;
• Overall nominal sales are expected to increase by 3.1-3.5% for 2018, continuing last year's growth;
• Exports are expected to grow by 2.5-3.5% in 2018, an uptick after several years of weakness;
• All indicators signal the 2018 economy will continue to grow on par with 2017 except for employment, which is projected to slow during 2018.
The West Michigan economic survey was conducted by Isely, and Grand Valley economics professors Gerry Simons and Wei Sun, along with graduate assistant Richa Bhurtel. Staff members from the West Michigan Regional Small Business Development Center, housed in the Seidman College of Business, assisted with the survey.
For more information, contact Paul Isely at (616) 331-7418.