By Maggie LaNoue
Contributing Writer
March 12, 2020
The keynote speaker for Albion’s 2020 Economic Forecast was Jim Robey, Ph.D., of W.E. Upjohn Institute for Employment Research
The keynote speaker for Albion’s 2020 Economic Forecast was Jim Robey, Ph.D. in Urban Studies from Cleveland State University. Herm McCall, the EDC Chairman of the Board, introduced Robey, after thanking Mayor Dave Atchison, and Chief Scott Kipp for their report on the City of Albion. The Recorder will print separate stories of their presentation and one about Sheridan Township’s solar farms.
Robey provides research and technical assistance on economic issues across Michigan and nationally.
“The United States is in the longest period of expansion since World War II,” Robey began his presentation with this chart, using figures from the employment index. “Compared to the Reagan era recovery, in the years 1981- 1990, though, with approximately 600,000 new jobs each quarter, the current recovery of about 500,000 new jobs per quarter is a bit anemic.”
Robey mentioned a few times that the data in the PowerPoint charts were primarily collected and analyzed before the effects of the Coronavirus had begun to affect the markets.
He next showed a slide of the stock market from the past 12 months with notes on events such as tariffs, job reports, and trade deals, and then a sharp decline at the end of January 2020. The fall happened when the Coronavirus was first reported and into February when the virus continued to spread.
Robey mentioned a few times that the data in the PowerPoint charts were primarily collected and analyzed before the effects of the Coronavirus had begun to affect the markets.
There was data about the Consumer Price Index and Consumer Confidence. Here there was a mention of “No More Cruises.” Robey said that travelers could still likely travel for vacations and business to most parts of the world, “But not Italy.” He also mentioned that getting to foreign destinations and spending time there might be more straightforward than getting home to the United States again. The policies related to travel could change at any time.
There was also a list of “What keeps economists up at night worrying about a recession?” that included variables such as trade wars, interest rates, Federal debt, politics, and a new entry of “Global Pandemic” that he said was entered two weeks ago. Tobey said that the insight had shown signs of being correct.
…getting to foreign destinations might be more straightforward than getting home to the U.S. again. The policies related to travel could change at any time.
There was a chart with bubbles showing Michigan gains and declines in key sectors of the economy, with the most significant decreases being Retail and Health Care, and equivalent increases in Manufacturing, Professional, and Government. Leisure and Hospitality was also up, but not as large a scale as the other sectors.
The employment rate for Calhoun County continues to hold at just above the “pre-recession rate” of 3.5%. There is a tighter labor market here than some other parts of the U.S., which is driving up some wages. The manufacturing growth of Calhoun County is trending below Michigan as a whole, but higher than national growth. The U.S. growth of employment has been somewhat flat due to smarter machines, needing better-trained workers but fewer of them, to accomplish the same output. Overall, a higher proportion of the labor force in Calhoun County is employed than in the past. Housing values continue to rise, with a mix in Calhoun County and the highest increases in Albion and north of Albion.
“What keeps economists up at night worrying about a recession?”
A new entry of “Global Pandemic” was entered two weeks ago.
Housing Costs
New construction has remained relatively flat due to the cost of building a home now, averaging $250 per square foot. There are concerns when the cost of housing is higher than 30% of the household’s income. Percent of homeowners paying 30% of their household income or more for housing is 16% – just slightly more than the U.S. overall, 14% of home owners pay more than 50% for housing costs.
Fifty percent of renters pay 30% or more of their household income for housing. The Calhoun County percentage is about the same as for the entire United States. Half of those in the above category spend over 50% on their housing costs.
Costs for housing in Calhoun County remain lower than in the Kalamazoo area, where the average price for housing is $1,600 a month. Still, housing costs are going up in Albion and Calhoun County.
There were questions from the audience as to why renters did not just buy a house. Robey explained the barriers to entry into homeownership, include coming up with a down payment and credit availability for renters who might have lower income than most homeowners.
Robey then showed how accurate their predictions were for the previous year. Upjohn Institute predicted that
- Service-producing jobs would decrease by .5% and instead there was a decrease of .1%
- Government jobs would increase by .5%; the actual increase was 1.2%
- Goods-producing jobs would increase by .8%, and this one prediction was exactly right. The Institute did accurately predict the trend of each type of employment. Still, the actual numbers were more favorable in two of the three categories.
For the upcoming forecast, Robey presented the employment figures for 2020 and 2021. Using data from Regional Economic Models, Inc., and Bureau of Labor Statics, Upjohn Institute gives a forecast of Goods Producing jobs dropping 1% for 2020 and 1.4% for 2021. Service providing employment up 1.1% for 2020, and .1% for 2021, and Government jobs down .5%, and .9% respectively.
More background on this story and the PowerPoint of the W.E. Institute’s presentation is available at www.AlbionMich.net/forecast2020.
Jim Robey has presented the Calhoun County Economic Forecast in Albion for the past five years in his role as the Director of Regional and Economic Planning Services for the W.E. Upjohn Institute for Employment Research. Kalamazoo is the home of the Upjohn Institute.
A pharmacist, W.E. Upjohn, was the founder. He became interested in the employment of the region through a series of accomplishments. Initially, Upjohn created a friable pill formula where any medicine could be better absorbed in the digestive system. His pharmaceutical company proliferated. Upjohn was an early initiator of the 40 hour work week and other workers’ rights and benefits. He formed the W.E. Upjohn Institute to help track employment data to serve businesses and workers better.
OVERVIEW – Albion’s 2020 Economic Forecast includes surprises and unknowns – An Overview
OUTLOOK – The City of Albion Outlook – 2019 Review and 2020 Preview
SHERIDAN TOWNSHIP – Advanced Planning makes nearby Sheridan Township Future Home to Michigan’s Largest Field for Solar Power
EXTRAS – Albion 2020 Economic Forecast Featuring Jim Robey, Economist, W.E. Upjohn Institute
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