Upjohn Institute predicts a smaller job loss West Michigan in 2010

December 14, 2009
| By Pete Daly |
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Employment in the Grand Rapids/Wyoming metropolitan statistical area is predicted to decrease by about 1.4 percent over the course of 2010, in the opinion of George Erickcek, senior regional analyst of the W.E. Upjohn Institute for Employment Research.

Erickcek, making his annual forecast in Grand Rapids Thursday at West Michigan Economic Outlook 2010-2011 presented by The Right Place Inc., said he expects regional employment to increase by about three-tenths of 1 percent in 2011.

In setting the stage for his local economic forecast, Erickcek pointed out that on the national level, "2010 is looking better and better." Gross domestic product increased by 2.8 percent in the third quarter of 2009, the stock market has enjoyed "a nine-month run" and housing starts are up.

On the negative side, employers nationwide are still cutting payrolls, although the job loss is easing. During the third quarter, total employment declined by 860,000 jobs, but only 11,000 jobs were cut in November, and the national unemployment rate inched down to 10 percent.

Erickcek also noted that the nation's banks "have a trillion dollars (in reserves) to lend out — but they are not," which he said continues to stifle growth in employment.

As for Michigan, this state still leads the nation in unemployment, according to Erickcek, and lost 830,000 jobs from 2000 to 2009. Total employment in Michigan has declined for 10 straight years and is expected to decline in the next two years, he said, citing research data from the University of Michigan.

Current employment in the Grand Rapids-Wyoming MSA (Kent, Barry, Newaygo and Ionia counties) is almost 10 percent below its 2000 level, while national employment is at the 2000 level.

For the Grand Rapids-Wyoming MSA, Erickcek predicted that during 2010, goods producing jobs will decrease by 3.2 percent, compared to a decline during 2009 that is shaping up to be about 10.6 percent. Jobs in service-providing industries are predicted to decrease by about 1.1 percent, compared to the 3.9 percent decrease in 2009. Government jobs are predicted to decrease by about two-tenths of 1 percent, compared to a decrease of one-half of 1 percent this year.

Erickcek prefaced his 2010 forecast with a review of the accuracy of the predictions he made last year. One year ago at the Amway Grand Plaza forecast, he predicted a total decrease in jobs in 2009 of 2.4 percent, but now the estimate of the actual decrease during 2009 is more than double that: 5.1 percent. Last year, he predicted a decrease of 8 percent in goods producing jobs; the actual decrease is now estimated at 10.6 percent.

Erickcek said he was most surprised at his inaccuracy regarding service-providing jobs. He had predicted a 1 percent decrease, but the actual is estimated to be 3.9 percent. But his prediction for 2009 government employment change was very close; it decreased by 0.5 percent, as opposed to his prediction of 0.4 percent.

Manufacturing job losses in West Michigan are lower than the state's overall average, and more closely reflect the national level. Michigan has lost 50 percent of the manufacturing jobs it had in 2000.

Erickcek compared employment data for Grand Rapids and 11 other cites: Omaha, Pittsburgh, Des Moines, Detroit, Fort Wayne, Indianapolis, Kansas City, Louisville, Milwaukee, Minneapolis and St. Louis. The 11.5 average unemployment rate for Grand Rapids from January through October this year was the highest, with the exception of Detroit with 15.5 percent.

The Grand Rapids area suffered a 5 percent drop in total employment, comparing January through October in 2009 to the same period last year. Only one of the comparison cities exceeded that — Detroit, with a 7.7 percent drop, and Milwaukee was the only city to match Grand Rapids.

The bad news currently, said Erickcek, is the local MSA's third-quarter unemployment rate, which stood at 12 percent, compared to 7.6 percent one year ago. That reflects 46,800 people looking for work in Kent, Barry, Newaygo and Ionia counties. The third-quarter total employment count is down by 4.6 percent compared to last year. The only major jobs section reporting growth was health care and private education, he said.

The good news is: Unemployment insurance claims in the third quarter were down by 42 percent, compared to the second quarter.

Other good news: The region's purchasing managers index is "nicely up," and temporary employment was up in the third quarter. Temporary employment is considered a reflection of the direction the overall economy is taking.

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