Economist Sees Sunnier Days Ahead
As he has explained in the past, an economist trying to predict the future is like trying to steer a car using the side view mirrors.
“But right now,” he told the Business Journal last week, “it’s a little bit hard to see the clouds.”
Erickcek, who probably could qualify as a member of the Coffee Dunkers of America, is senior regional analyst with the W.E. Upjohn Institute for Employment Research.
He was responding to questions about remarks he is to deliver Dec. 16 in the West Michigan 2004 and 2005 Economic Outlook — the annual regional economic and employment forecast for Kent, Ottawa, Muskegon and Allegan counties.
His statement about the absence of clouds came the day after the Institute of Supply Management announced that its overall index of manufacturing had suddenly climbed to the highest level since December 1983.
The news had the Dow-Jones Index flirting the next day with the 10,000 mark.
But to Erickcek the truly meaningful number was the jump in the institute’s index of manufacturing activity from 57 in October, already an expansive number, to 62.8 in November.
“That’s really quite a jump,” he said.
He said the institute’s November survey of purchasing managers showed a surge in new orders and a big jump in production in nearly every industry — quite a contrast with the sudden deep drop he noted in another address three years ago concerning the index of the National Association of Purchasing Managers.
Erickcek said he expects to see substantial growth in nearly every West Michigan manufacturing component — with the probable exception of the big office furniture manufacturers.
“Furniture always lags,” he said. “The question is whether the lag is over.
“Office furniture is tied to capital spending,” he said, “and after a trough in the economy, businesses typically don’t start investing in plant and equipment for two to three quarters.
“Only this time it has been running more like eight quarters.”
He said he thinks BIFMA’s projection of 2.4 percent growth in 2004 is probably on target. “I think we’ll see some growth,” he said, “but I don’t think it will be as fast as in the other sectors.”
In addition to the office furniture industry, he is to review the automotive, service and retail industry trends nationally and locally and the impact on local employment.
He said he believes last week’s news indicates that the employment picture in West Michigan will brighten considerably. But he cautioned not to expect to see a sudden big drop in the unemployment rate.
That rate likely will remain static, he explained, because many unemployed people probably had given up job seeking and thus had fallen from the statistical radar screen.
“Well, as they hear about other people getting jobs again,” he said, “they’ll come back into the market and that will tend to keep the unemployment number high even though more people also will have jobs.”
Erickcek’s analysis of economic trends and his short-term employment forecast will come in a Tuesday breakfast meeting in the Ambassador Ballroom at the Amway Grand Plaza.
Also speaking will be Maggie McPhee, director of information services for The Employers’ Association.
She is to highlight local wage and compensation trends compiled from the association’s annual survey.
The association is sponsoring the breakfast along with The Right Place Inc. and economic development agencies in Ottawa, Muskegon, and Allegan counties. BJ