Muskegon County's Economy Reflects Nation

January 27, 2008
| By Pete Daly |
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MUSKEGON — A "general collapse" in housing starts in Muskegon County and a drop in employment in 2007 are regional reflections of two major problems afflicting the entire nation, according to George Erickcek, senior regional analyst at the W.E. Upjohn Institute for Employment Research in Kalamazoo.

In preparing a report on the Muskegon economy in 2007 and 2008, Erickcek said the sub-prime mortgage crisis and the weakening American automobile companies account for most of the economic slowdown throughout West Michigan.

Most striking is the impact of the crisis in the housing market. Building permits for single-family homes in Muskegon County totaled just 126 last year, compared to 425 in 2006 and 739 in 2003.

Employment in Muskegon County fell by 0.7 percent in 2007, which included the loss of 440 jobs in manufacturing — but there would have been an actual gain in manufacturing employment if job losses in "transportation equipment" had not been counted, according to Erickcek. He pointedly noted that the "transportation equipment" employment category includes automobiles.

"Some manufacturing gained jobs. In furniture, 50 jobs were created. In primary metals, which includes Howmet, 80 jobs were created," said Erickcek.

But auto industry job losses cancelled out those gains, "an impact of the tie that West Michigan has to the Detroit Three, which is felt all over Michigan."

"Unfortunately, as we look into the future, we expect the Detroit Three to continue to lose share" in 2008 and 2009, said Erickcek.

Other variables in the Muskegon County employment picture are reflected in an increase of jobs in private services by 0.3 percent and an "unexplainable" 3.8 percent decline in government jobs. "Private services" includes retail trade, hospitals/health care and others.

Erickcek's bottom line prediction for employment in Muskegon County in 2008 is, "unfortunately," a drop in employment by 0.8 percent.

As for 2009, he said, "As the national economy is expected to come out of this slowdown, we expect employment to be flat in Muskegon County." He added that means no change, or possibly a decline of only one-tenth of 1 percent.

The mortgage industry crisis that is halting new home construction has a ripple effect on employment in many states. Universal Forest Products, for example, has just announced plans to close facilities in several states, due to the decline in the residential construction industry.

Erickcek said the "collapse in residential construction is being witnessed not only in Muskegon but also in similar numbers (of new home construction permits) being reported in Grand Rapids and throughout Michigan."

"We have not seen this (much) decline in housing starts for 33 years, nationwide," he said.

Erickcek said he believes the housing market crisis has "not yet found the bottom," but added he thinks there may be a turnaround by August or September. 

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