Bank exec says variety fuels GR economy
Region has 20 companies with almost 2,000 employees each, which limits recession fears.
The variety of industries that call West Michigan home have provided the region with protection from recessions in the past and will continue to do so at least through the next cycle, according to a national economic analyst.
Huntington Bank Chief Investment Officer John Augustine said last week the diversification of Grand Rapids’ markets is one of the catalysts behind the city’s growth and bounce back from recession periods and a primary reason the future is bright for the region’s economy.
“We’ve almost built this mini-national economy to some extent on our own in western Michigan,” Augustine said. “And now when a recession hits, we come back faster than the eastern side of the state, and our quality of life here is so off the charts that we can get young people to stay here.”
Augustine sat down with the Business Journal following a presentation he delivered to local investors and VIPs last week, during which he prognosticated the national gross domestic product should rise about 2.1 percent in 2017 followed by a 2.5 percent increase in 2018. He also predicted that in Grand Rapids, the economy will outpace national growth as it has done for the past few years.
One area in which Augustine said was surprising to see grow stronger, and something to watch in local markets, is the rise of exports.
“Exports have actually strengthened the last two months, and they’re up about 7 percent year over year,” he said. “We fit into that generally in small ways, a lot of components that grow into bigger things, especially in the aerospace field, we’re doing a lot.
“What that tells us is that the rest of the world is picking up a bit, and we’re staying with it. That could be one area where we see growth now where we weren’t expecting it.”
Augustine also said in West Michigan, there are about 20 companies with more than 2,000 employees each in the region, which not only contributes to the Grand Rapids metropolitan area’s low unemployment levels — 3 percent at the start of the year — but also its reputation.
“It’s an impressive list, and you don’t see that much outside of the big cities like New York and Chicago,” he said.
Augustine said businesses in the region need to be prepared to compete for the region’s talent, as he expects workers who move to the region or enter the workforce likely will be snapped up quickly after moving to Grand Rapids. The city itself will be able to compete with similar-sized regional MSAs, such as Minneapolis, Louisville and Buffalo, he said, but noted it may be time to expand the national recruiting effort beyond the Midwest, advertising the city in other regions.
As for how the policies of President Donald Trump’s administration may affect business in Grand Rapids, the markets have remained steady for now, Augustine said. While the new administration currently is focused on policies that don’t have a direct effect on the region — immigration and trade reform — the markets also have not yet reacted to possible changes in the health care industry via the repeal and replacement of the Affordable Care and Patient Protection Act.
However, Augustine said the wait-and-see approach likely will run its course by summer, which is when we can expect to see the new administration’s policies ripple through the region.
“Markets are extraordinarily patient right now,” Augustine said. “They’re taking a wait-and-see attitude toward the tax, fiscal and regulatory policies, and they’re again taking a calm approach to health care reform, in whatever form that passes in.
“Our takeaway is that patience is evident, and we don’t know when it’ll run out — but we do need policy implemented here soon on a broad range of topics, and that’s going to come, probably more in the summertime.”