Economic Reports Are Mildly Upbeat
GRAND RAPIDS — West Michigan's economy won't set records this year, but business confidence — like hiring — is trending upward in what looks to be "a period of long-term slow growth."
That's a nutshell summary of the annual Grand Rapids economic forecast that Hari Singh, of the Seidman College of Business, was to deliver this morning.
Singh chairs the college's economics department.
Singh based his report, released to the media earlier in the week, on the department's November survey of 161 firms in Kent, Ottawa, Muskegon and Allegan counties.
In tandem with Singh's presentation, representatives of Grubb & Ellis/Paramount were to present a somewhat similar 2005 outlook from the perspective of West Michigan's commercial real estate industry.
The commercial real estate market, the report said, "must absorb some large manufacturing facilities no longer effectively utilized in today's environment." But it also pointed to stepped-up demand for small to medium manufacturing facilities.
The Grubb & Ellis report also indicated that Grand Rapids' office market peaked in mid-year, "paving the way for a sense of growing optimism."
"The fourth quarter," it added, "showed improvement in both office occupancy and absorption."
Singh's report indicated that the department's survey results were similar to last year's: "Somewhat pessimistic about the current situation but pragmatically optimistic about the future."
The most optimistic aspect of the report seemed to be that productivity growth has slowed sharply, likely indicating "increased opportunities for new hiring."
The analysis remarked upon "widespread anecdotal evidence that firms are always trying to substitute capital equipment in place of labor to reach their output goals."
The numbers, Singh said, tell a different story.
"Our survey indicates that a vast majority of the employers are not planning to substitute capital equipment for labor (71 percent). Of those that are substituting capital for labor, 78 percent indicate that this substitution will be for less than 5 percent of their labor force.
"These expectations," the report indicates, "bode well for the regional labor market."
The Singh report indicates West Michigan's economy will parallel the national economy's 4 percent growth rate, and that job creation nationally and locally will continue to modestly outpace the labor market's growth.