08 Economy Familiar Tune
GRAND RAPIDS — Economic conditions in Michigan next year are expected to be about the same as this year. The state’s struggling economy is expected to cost the loss of 1,100 jobs in the Grand Rapids area alone in 2008, representing a loss of $72 million in personal income.
The University of Michigan estimates that when all is said and done, there will have been a loss of 47,420 jobs in Michigan this year, and is forecasting the loss of 81,020 jobs in 2008. George Erickcek, senior regional analyst with the W.E. Upjohn Institute for Employment Research, said the state’s troubles can be blamed, in part, on stagnant auto and light truck sales and the Big Three’s loss of market share, which has dwindled from a 74-percent global market share in 2001 to a 52-percent global market share today.
Unemployment in the Grand Rapids-Wyoming metropolitan statistical area is higher than all other regions in Michigan, with the exception of Detroit, and employment in the area is expected to be flat in 2008. While manufacturing employment in metro Grand Rapids just about matches that of the nation’s, gains in professional and business services employment in Grand Rapids — and throughout the state of Michigan — trail behind the national average, according to the Upjohn Institute.
However, Erickcek foresees positive employment growth in the Grand Rapids-Wyoming MSA. Health care is becoming an extremely important catalyst for economic growth, and manufacturing remains an important determinant to economic performance, said Erickcek, who was one of three keynote speakers at the West Michigan 2008-2009 Economic Outlook presentation sponsored by The Right Place Inc. Thursday.
The greater Grand Rapids economy, he said, is being fueled by strong gains in private education and health services. Total employment in the Grand Rapids-Wyoming MSA increased by 2,500 jobs between the third quarter of 2006 and the third quarter of this year, and about 2,000 of the new jobs were in the health care and private education sectors, according to Erickcek’s data. He said most of the surge came from newly created jobs at hospitals, nursing homes and outpatient care facilities.
“Something really exciting has happened here in terms of growth in health-care-related jobs,” Erickcek said. It’s a growing trend throughout the United States, and health care will continue to be an area of future job growth, he noted.
Regions that generate new jobs with new products, new processes and new markets will be the economic leaders, Erickcek said. As he and others have pointed out, this region’s significant manufacturing know-how can be leveraged for new processes and the manufacture of new products, such as medical devices.
The nation as a whole faces two major threats in the coming year, Erickcek said. First is the credit crunch brought on by the blowout of the subprime loan market. The Federal Reserve reported in October that banks were tightening their lending standards on commercial, industrial and commercial real estate loans. The rate on three-month loans between banks rose from 4.9 percent in November to 5.14 percent in December, suggesting that banks aren’t as willing to lend to one another at this time, Erickcek said.
The second threat is the dip in consumer confidence, which is at a two-year low. Some 19 percent of Americans surveyed in October agreed that “things are bad.” That’s up from 16 percent in September. Falling home values, increased debt and high gas prices have all helped dampen the consumer mood, so holiday sales are expected to be a little soft this season, Erickcek said.