Despite the devastating impact the COVID-19 pandemic has had on state and local economies the last 18 months, Michigan and the Grand Rapids region appear to be recovering fairly nicely.
That’s the assessment coming out of The Right Place’s 25th annual Economic Outlook report, delivered Thursday in a virtual presentation from Randy Thelen, the new president and CEO of The Right Place, and Donald Grimes, regional economic specialist at the University of Michigan.
“This is an economically cloudy time, no question,”said Thelen, who replaced longtime president/CEO Birgit Klohs on March 1. “Nobody here has ever gone through an economy quite like this.”
Thelen delivered a thorough look at the year in review and a state-of-the-region report, particularly in the eight-county region The Right Place serves.
During his presentation, Grimes did an analysis and a 2022 economic forecast of the U.S., Michigan and regional economies.
And both were fairly optimistic. Among the observations Grimes noted:
- U.S. Gross Domestic Product in the third quarter of this year was 1.4% higher than the pre-pandemic peak in the fourth quarter of 2019.
- The unemployment rate in the U.S. (4.2 percent in November) is less than 1 percentage point higher than the pre-pandemic low.
- In Michigan (6.1 percent in October) the unemployment rate is a little over 2 percentage points higher than the pre-pandemic low.
“We see the unemployment rate declining throughout 2022 and 2023, ending up at about 4.5% by the end of 2023, which is about a percentage point higher than it was before covid,” Grimes said. “In terms of the unemployment rate, (Michigan is) doing pretty well.”
- Keep in mind, however, that the pre-pandemic unemployment rate in the U.S. was the lowest since 1969. In fact, the U.S. unemployment rate today is lower than it was in any month between March 1970 and February 1999, and for any month between March 2001 and August 2017.
“Therefore, the U.S. unemployment rate today is very low by historical standards,” Grimes pointed out. “The unemployment rate in Michigan is also low by historical standards, but monthly levels below the current value are not as rare.”
- Real disposable personal income per capita in the U.S. in October was 1.7 percent higher than it was before the pandemic in February 2020.
- The average net worth of American households, adjusted for inflation, increased 17.5 percent from the fourth quarter of 2019 to the second quarter of 2021. This increase was widely shared, the percentage increase in the net worth of the poorest 50 percent of households was greater than for the richest 1 percent of households, although in dollar terms the increase in net worth was much less for poorer households.
Where the economy is falling short, Grimes said, is in the number of jobs and the number of people in the labor force. In the U.S., there are 2.6 percent fewer jobs today than there were in February 2020 and in Michigan there are 5.1 percent fewer jobs than in February 2020.
“The unemployment rate would be much higher except for the fact that many of the formerly employed workers have dropped out of the labor force, which is down by 1.5 percent in the U.S. and 3.4 percent in Michigan since February 2020,” he said.
Thelen, meanwhile, pointed out that the pandemic left The Right Place well behind most of the economic goals and markers it set last year. As the second year of the three-year plan (2020-2022) winds down, though, all of the organization’s goals are within reach.
Last year was the first year of its three-year plan, and “hitting our objectives was quite difficult.”
The Right Place was a leader in the fight against the spread of covid, with members “standing tall and meeting the needs” of the community, Thelen said.
“But it did create an economic headwind that was too much for us to overcome. As we ended up 2020, we were behind the curve in terms of our objectives,” he acknowledged. “This year … stakeholders in the organization really stepped up, the business community made bold decisions and as a result we are now ahead of plan on every one of our core metrics.”
In 2021, the organization’s work has resulted in:
- 1,541 new and retained jobs
- $184 million in new and retained payroll
- $286 million in new capital investment
Since the start of the plan in 2020, the organization’s work has resulted in:
- 2,494 new and retained jobs (against 3-year goal of 3,400; 74% completed)
- $127 million in new and retained payroll (against 3-year goal of $184 million; 69% completed)
- $397 million in new capital investment (against 3-year goal of $500 million; 79% completed)
The organization met with 422 businesses in 2021. Overall, business leaders reported strong confidence in the local economy. Notably:
- 79% reported increasing sales
- 63% reported plans to expand
- 59% reported recruiting challenges
- 52% are planning to increase investment in training
- 94% said the region’s business competitiveness was “very good” or “good”
“The pandemic and the economic recovery … is truly, truly unprecedented,” Thelen said. “For us to bring forward an economic outlook … ultimately will help drive better decision-making by our businesses across the region.”