2014 was yet another great year!

Transcription

1 Forecast for Ottawa County 214 was yet another great year! George A. Erickcek Brian Pittelko W.E. Upjohn Institute for Employment Research February 3, 215

2 1 Outline The national economy is speeding forward on $2. per gallon gasoline and low interest rates Robust car and truck sales are fueling Michigan s economy Ottawa County had a good year in 214 Forecast: continued employment growth 1

3 GDP Grew by a Moderate 2.6 Percent Annual Rate in the Third Quarter: Consumers Did Their Part 2 6 Gross Domestic Product and Nonfarm Employment 1,5 Percentage change in GDP Employment gains have been outstanding, more than 8, jobs in the fourth quarter. Forecast 1, , -1,5-2, Employment change (s) -6 9 Q1 1 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1 GDP Nonfarm employment -2,5 Source: BLS, BEA, University of Michigan RSQE.

4 Employment Conditions Have Improved; the Number of Job Seekers Per Opening Has Dropped Below 2 3 6, U.S. Job Openings and New Hires 8 5, Job openings at end of month 7 Thousands (s) 4, 3, 2, 1, Job seekers per opening Unemployed / job openings Source: BLS. 3

5 4 Too Many People Are Not in the Game % Participation Rate and Employment Ratio, U.S. Labor participation rate Employment-to-population ratio 54. Dec 24 Dec 25 Dec 26 Dec 27 Dec 28 Dec 29 Dec 21 Dec 211 Dec 212 Dec 213 Dec 214 Source: BLS.

6 Prices and Interest Rates Remain Low: Prices may be too low but who is complaining about $2. per gallon gas? 5 6. Interest Rates and Inflation Annual percentage rate year Treasury bill 12-month change in CPI-U 3-year mortgages 3-month Treasury bill Source: Federal Reserve, BLS. 5

7 Consumer Confidence Index Finally Topped 1 Despite Stagnant Wages; However, Other Polls Have Not Been as Positive 6 Real Hourly Earnings and Consumer Confidence 5 12 $ Per hour 214 dollars Consumer Confidence Index Real hourly earnings Consumer confidence Source: Conference Board and BLS. 6

8 7 So Let s Sum Up The national economy was surprisingly strong in the third quarter and continued growth is forecasted Inflation and interest rates are low and expected to stay low. Gas price may stay low for the year. National employment is on the rise but wages remain flat The Fed has stopped its purchasing of bonds but will likely keep interest rates low On the negative side, the nation is standing alone in the global economy 7

9 8 Michigan Forecast Strong auto sales are pushing the state forward and most are forecasting that auto sales will remain high until at least 217 In 214, state employers added 31, jobs with manufacturers adding 11,6 jobs during the year The state s unemployment is down to prerecession levels but still higher than the nation s Employment growth is expected in 215 and 216 8

10 In 214, State Employers Added Nearly 31, Workers Manufacturing Mining, logging, const. Employment Change, 213 to 214 (in thousands) Wholesale Transport. and util. Retail Information Financial activities Prof. and business Leisure and hospitality Education and health Other services Government Source: BLS CES. 9

11 Auto Sales Continue to Pick Up and Are Forecast to Drive Past 16 Million Units in 215 and Strong sales years are expected in 215 and 216; and what about $2. per gal gas? Source: BEA. 1

12 The State s Unemployment Rate Is Back to Pre- Recession Levels and Now Stands at 6.3 Percent Unemployment Rate Percent of labor force Source: BLS LAUS. 11

13 Latest University of Michigan Employment Forecast for the State Is Very Bullish 12 Employment forecast: 215 5,25 jobs ,14 jobs Source: University of Michigan RSQE, Nov

14 13 Ottawa County: A Great Year Unemployment is dropping because residents are finding jobs Manufacturers are driving the local economy The county is coming back due to its competitiveness Forecast: More of the same

15 The County s Unemployment Rate Is Down to 4.3 Percent Very Close to Full Employment Unemployment Rate for Ottawa County Source: BLS LAUS and Upjohn Institute.

16 In 214 More Than 9, Residents Found Jobs, Including 7, Individuals Who Were Previously Not in the Labor Market 15 Year November-to-November Change Labor force change Employment change Unemployment change 211 1,87 4, ,457-1, ,85 2, ,979 9,148-2,524 Source: MI Labor Market Indicators, Local Area Unemployment Statistics

17 16 Employment Increased by 3,9 in 214 2, 1,5 1, 5-5 Manufacturing Mining, logging, and const. Trade, transport., and util. Employment Change, 213 to 214 If you are willing to accept a 2.7 manufacturing employment multiplier, manufacturers are driving the economy. Financial activities Information Prof. and Business Education and health Leisure and hospitality Government Other services Source: BLS CES.

18 Manufacturing Gains Were Reported across Many Sectors 17 Employment Change, Q1 213 to Q Food Fabricated metal Computer and elec. Furniture 2 Machinery 1-1 Primary metal Chemical Paper Textile Beverage Printing Plastics Wood Electrical equip. Misc. -2 Transportation Source: BLS CES.

19 The Number of Job Postings Increased by 1,5 in 214 over Manufacturing Transport. and warehouse Hospitality Educational services Health care Prof., sci., and tech Public administration Finance Other services Retail trade Information Arts, ent., and rec. Utilities Management Construction Mining Agriculture Wholesale Real estate Admin. and waste Job Posting, 213 to 214, All Industries Source: BurningGlass Labor Insight.

20 Ottawa County Has Fully Recovered from the Recession In 214, Employment Was More Than 4, Greater Than in Total Employment Index (2=1) U.S. Michigan Ottawa Co. Source: BLS LAUS and Upjohn Institute. 19

21 Service Employment Is Reaching New Highs: 1 Percent Greater Than Private Services Employment Index (2=1) U.S. Michigan Ottawa Co. Source: BLS LAUS and Upjohn Institute. 2

22 15 Manufacturing Employment Is Just Reaching 27 Levels but Still Is More Than 15 Percent below 2 Levels Manufacturing Employment Index (2=1) U.S. Michigan Ottawa Co. Source: BLS LAUS and Upjohn Institute. 21

23 The Question Remains, However: Is Ottawa County s Success Due to Its Industry Mix or Competitiveness? Private-sector employment in 213 reached 27 levels in the Ottawa County Was this because of the strength of the national economy simply raising all boats including Ottawa County? Or Was it because of Ottawa County s economic competitiveness? 22

24 Ottawa County s Competitiveness Enabled It to Rebound from the Recession 23 5 Private Employment, 27 to 213 Total Export -5-1, -1,5-2, -2,5-3, 2,72 above expected growth 1,96 above expected growth Source: REMI. Expected change Actual 23

25 24 Still, Wages Are Flat as of 213 Annual income ($s) Full-Time Production Wages in Ottawa County 1th Percentile 25th Percentile Median 75th Percentile 9th Percentile Source: IPUMS USA.

26 25 Just a Reminder, Education Matters Income ($ s) Annual Income by Educational Attainment Less than HS High school Some college Associate's Bachelor's Graduate Source: IPUMS USA 213.

27 Not Only Do High School Dropouts Face High Unemployment, They Tend Not to Move Either 26 Unemployment rate Unemployment by Educational Attainment Less than HS High school Some college Associate's Bachelor's Graduate Source: IPUMS USA 213.

28 Construction Is Coming Back and Reports Suggest a Sharp Improvement in ,5 Building Permits Ottawa County 2, 1,5 1, Total, all structure types Single-family houses Source: BLS LAUS and Upjohn Institute.

29 28 Now to the Forecast. But, wait! How did you do last year, fella? Especially since you thought the data would not be available to check the forecast

30 29 We Were Simply Too Timid Forecasted and Actual Employment Change (Percentage Change) Forecast Actual Total Goods-Producing Services-Providing Government

31 Brian Long s PMI Indicates a Stable Trend in Business Activity West Michigan Area Purchasing Managers Index Purchasing Managers Index month moving average

32 Michael Dunlap s MADA Index Shows Stable to Improving Conditions in Office Furniture 31 MADA index MADA Office Furniture Industry Index and Index of West Michigan Furniture Industry Employment Index of Grand Rapids metro furniture employment MADA index 4 On December 2, BIFMA released the new IHS Global Insight industry forecast which calls for the industry production to increase by 4. percent in 215, up from 3.7 percent in Source: MADA and BLS Index of employment (27 = 1) 31

33 215 and 216 Employment Forecast for the Holland Grand Haven MSA 32 5.% Total Goods producing Private services Government 4.6% Percent change 4.% 3.% 2.% 1.% 3.4% 2.4% 2.6% 2.7% 2.5% 3.% 2.8% 3.% 1.3%.4%.% -1.% -.2%

34 33 So What Keeps Me up at Night? The global economy The U.S. is the only game on the planet. Can we do it alone? Lack of improvement in income equality Polls suggest that households are more pessimistic not only about their economic future, but for their kids, as well 33

35 Forecast for Ottawa County 214 was yet another great year! George A. Erickcek Brian Pittelko W.E. Upjohn Institute for Employment Research February 3, 215