GRAND RAPIDS, Mich. (WOOD) — After four months of slowdown, the West Michigan economy has seen a month of upturn, a local economist says.
Brian Long, the director of supply management research at Grand Valley State University’s Seidman College of Business, has been tracking the Grand Rapids-area economy since 1989. He tracks the economy by sending out a monthly survey to regional businesses and purchasing managers, tracking business improvement, production, employment numbers and lead times.
Following four straight months of slowdown, the regional economy is starting to show signs of growth, he said.
“Fortunately, our numbers came back from what was several months of downturn,” Long said. “They came back to almost break even, which is an indication that once again the slight problems that we seem to have in the economy in West Michigan may be over now. One month does not make a trend, of course. But we’re hoping — given that the other numbers coming in from not only the state but around the world are more positive — that this will be a trend that continues into next month.”
The four-month slowdown in West Michigan was driven in part by an electric vehicle industry that wasn’t picking up as quickly as companies had hoped. While local parts makers still have concerns about the rest of the year and going into 2025, Long said companies seem to have shifted production around to meet areas where there is more demand.
Car sales have picked up more over the past month than what was expected, Long said, and he expects the auto industry to be stable going into the new year.
The second biggest cyclical industry in West Michigan, office furniture, has also seen some hardships. About 14% of the world’s office furniture is made in West Michigan, Long said, and the hope is that that industry will continue to stabilize after the pandemic sent many employees away from the office.
“The entire country is trying to figure out who’s going to be in the office, who is not going to be in the office, who’s going to work from home and that type of thing,” he said. “So the market has not been strong. … A lot of firms still recognize though that even if they’re going to have people come in for three days out of the week or whatever, that they still have to have office space and office furniture for them. So we’re hoping, of course, that that trend will continue.”
Overall, the uptick in West Michigan is driven by a global and national economy picking up, Long said, as the Federal Reserve tightens interest rates to try to create a soft landing. He added that inflation is still a bit too high, and if interest rates are cut too much, it will get worse.
While it’s still possible the economy could head toward a recession, Long said he doesn’t see one right now, even as unemployment rises a bit in West Michigan.
“We may be headed toward a soft landing now and the Fed will have accomplished what it wants to. The signs are positive for that,” he said. “I am down to 20% odds on a recession as we go into the new year. We’ll have to wait to see, of course, because the geopolitical situation is, of course, unstable and that could upset the economy at any point in time. There may also be something that we haven’t thought about yet.”