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The 2016 –2017 Employment Forecast for
Battle Creek MSA
Randall Eberts
Brian Pittelko
W.E. Upjohn Institute for Employment Research
January 14, 2016
Can it get any better than this?
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A Special Thanks to …
1
…for their sponsorship.
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Why am I here…and not this guy?
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The answer…
Retirement and…
…a new grandson 3
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" ," said Ed Yardeni,
Most of the blame goes to China
HAPPY NEW YEAR!!??
Investors are also alarmed bythe decline in China’s currency
Crude oil continues to nosedive.Crude plunged as much as 4% to$32.10 a barrel, the lowest levelsince late 2003.
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Others think stocks will rebound fromthe China fears, which is exactlywhat happened last summer .
"There isn't really some new structural smoking gun for
the economy and markets like mortgages were back in
2008," Kopp said.
This bull market will celebrate its
seventh anniversary in early March.
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The news last week wasn’t new—slowing Chineseeconomy, but another bad week for China’s stock market..
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1800
1850
1900
1950
2000
2050
2100
2 0 1 5 - 1 2 - 2 1
2 0 1 5 - 1 2 - 2 2
2 0 1 5 - 1 2 - 2 3
2 0 1 5 - 1 2 - 2 4
2 0 1 5 - 1 2 - 2 5
2 0 1 5 - 1 2 - 2 6
2 0 1 5 - 1 2 - 2 7
2 0 1 5 - 1 2 - 2 8
2 0 1 5 - 1 2 - 2 9
2 0 1 5 - 1 2 - 3 0
2 0 1 5 - 1 2 - 3 1
2 0 1 6 - 0 1 - 0 1
2 0 1 6 - 0 1 - 0 2
2 0 1 6 - 0 1 - 0 3
2 0 1 6 - 0 1 - 0 4
2 0 1 6 - 0 1 - 0 5
2 0 1 6 - 0 1 - 0 6
2 0 1 6 - 0 1 - 0 7
2 0 1 6 - 0 1 - 0 8
S & P 5 0 0 I n d
e x
… and not so good for the U.S. stock market
6% declinein the first week
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But let’s put last week behind us (and much of this
week) and look at why 2016 should not be 2008
• China stock market problems do not equal a global financial
meltdown
• Strong fundamentals…at least GDP and employment
• Growing consumer confidence and solid balance sheet• No apparent bubbles; housing coming back
Tempered by…
• Weak international economies
• Continued strong stimuli in US• Strong dollar (good for low inflation and imports/bad for
exports)
• Mental fatigue (whatever that means)
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What’s on the docket for this morning…
• National view of what the economy looks like
today compared to 2007
• Turn to the state economy to take its pulse and
• See how it might affect Battle Creek MSA’s
(Calhoun County’s) economy in 2016
• Which all leads up to …
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National
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GDP is still relatively strong and expected to keep chuggingalong through 2016
-10
-8
-6
-4
-2
0
2
4
6
-7 -6 -5 -4 -3 -2 -1 0 1 2 3 4
8 qtrs before now 8 qtrs before recession
Consensus forecas
Q1 2016
Q1 2008
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-100
0
100
200
300
400
500
-24 -23 -22 -21 -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1
M o n t h l y c h a n g e i n e m p l o y m e n t
Months since January 2016
2014-2015 2006-2007
24-month average2014-2015 of240,000
24-month average2006-2007 of 134,000
Employment growth is quite strong…last three months it
was above the 24-month average of 240,000 and abovethe 63-month average of 205,000 per month
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The consensus forecast sees employment growth continuing at anaverage monthly increase of 197,000 …whereas 2008 was a blood
bath, losing close to 1 million jobs
-1000
-800
-600
-400
-200
0
200
400
-6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7 8 9 10 11 12
M o n t h l y c h a n g e i n e m p l o y m e n t
Months from January of 2008 or January 2016
2016 forecasts 2008 actual
Consensus forecast
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Forecasts look for continued employment
growth in the next two years
Source: University of Michigan RSQE & Upjohn Institute
0
0.5
1
1.5
2
2.5
3
3.5
2014 2015 2016 2017
A n n u a
l e m
p l o y m e n t c
h a n g e
( m i l
l i o n s )
Consensus Forecast
RSQE (U of M)
Forecast
258,000/ mth
221,000/mth197,000/mth
133,000/mth
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Demand for workers is strong…number of job seekers
per opening Is back to pre-recession levels
0
1
2
3
4
5
6
7
8
0
1,000
2,000
3,000
4,000
5,000
6,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
U n e m
p l o y e d / j o b o p e n i n
g s
T h o u s a n d s ( 0 0 0 s )
U.S. Job Openings and New Hires
Job seekers per opening
Job openings at end of month
16Source: BLS Job Opening and Labor Turnover.
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Question is whether supply can keep up…
Employment growth depends upon:
• Population growth, primarily immigration
• Labor force participation growth
• Employment per labor force (flip side of natural rate ofunemployment)
Over the long-run, many analysts believe that the trends are
moving in the wrong direction:
– Population growth is slowing from 1.2 percent to less than1 percent, unless immigration picks up.
– As the workforce ages and young people postpone
entering the workforce, LF participation continues to fall
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Facing possible skills shortage of those in the labor
force…but this has not caused wages to increase
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2005 2006 2007 2009 2010 2011 2012 2014 2015
Year-over-Year Change in Total Compensation of
Private Industry Workers
Source: BLS.
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In the past five years, consumer confidence has risen
and so has household debt, but not where it was in
2008—135% of disposable income v. 103% now
0
20
40
60
80
100
120
-15
-10-5
0
5
10
1520
25
30
35
2010 2011 2012 2013 2014 2015
I n d e x : 1 9 9 5 = 1 0 0
B i l l i o n s ( $ )
Consumer Confidence and Change in Consumer Debt
Consumer debt Consumer confidence
Source: New York Federal Reserve and Conference Board.18
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Consumers are not spending beyond their
means…rate falling as more people are working
77%
78%
79%
80%
81%
82%
83%
84%85%
86%
87%
88%
1991 1996 2001 2006 2011 2016
Personal Outlays as a Percent of Personal Income
Source: BEA.
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What about possible bubbles?
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A housing bubble? No, home prices have recovered and
are back to about where they were before the recession
0
50
100
150
200
250
1991 1996 2001 2006 2011 2016
Housing Price Index 1991=100
Source: Federal Housing Finance Agency.
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Stock market bubble? No, price-to-earnings
ratio slightly below average since 2001
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
1 9 9 8 . 0 1
1 9 9 8 . 0 7
1 9 9 9 . 0 1
1 9 9 9 . 0 7
2 0 0 0 . 0 1
2 0 0 0 . 0 7
2 0 0 1 . 0 1
2 0 0 1 . 0 7
2 0 0 2 . 0 1
2 0 0 2 . 0 7
2 0 0 3 . 0 1
2 0 0 3 . 0 7
2 0 0 4 . 0 1
2 0 0 4 . 0 7
2 0 0 5 . 0 1
2 0 0 5 . 0 7
2 0 0 6 . 0 1
2 0 0 6 . 0 7
2 0 0 7 . 0 1
2 0 0 7 . 0 7
2 0 0 8 . 0 1
2 0 0 8 . 0 7
2 0 0 9 . 0 1
2 0 0 9 . 0 7
2 0 1 0 . 0 1
2 0 1 0 . 0 7
2 0 1 1 . 0 1
2 0 1 1 . 0 7
2 0 1 2 . 0 1
2 0 1 2 . 0 7
2 0 1 3 . 0 1
2 0 1 3 . 0 7
2 0 1 4 . 0 1
2 0 1 4 . 0 7
2 0 1 5 . 0 1
2 0 1 5 . 0 7
S & P
5 0 0 P r i c e E a r n i n g s R a t i o
2001-2015 average=27
That’s a bubble
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Is there a bubble in the auto industry? No, sales
have been gradually moving upward…
0
200
400
600
800
1000
1200
1400
1600
0
24
6
8
10
1214
16
18
20
2010 2011 2012 2013 2014 2015
U
n i t i n v e n t o r i e s ( 0 0 0 s )
S e a s o n a l l y a d j u
s t e d a n n u a l i z e d s a l e s ( m i l l i o n s )
U.S. Light Vehicle Sales and Inventories
Total light vehicle sales Unit inventory
Source: New York Federal Reserve and Conference Board.23
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…and in the long-term it looks like we’re just
returning to “Normal”
0
2
4
68
10
12
14
1618
20
22
24
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
A n n u a l r a t e o f s a l e s ( i n m i l l i o n s )
Annualized Rate of U.S. Light Vehicle Sales (in millions)
8
Source: BEA.
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Car Industry Fundamentals
• In 2014, the average age of a vehicle on the road was
11.4 years v. 9.8 years in 2007.
• With low gas prices, CUVs, SUVs, and pick-ups are
back• According the BLS, auto prices are trending with the
prices of all goods
•U of M is forecasting car sales to reach 18 million
units in 2016 and 2017. Wow!
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What about the effect of lower gas prices?
% chg Dec. ‘14-Dec. ‘15 % chg ‘14 – ‘15Total Cars -3.2 -2.2
Total Trucks +19.0 +13.1
26
What about the effect of strong dollar?
% chg Dec. ‘14-Dec. ‘15 % chg ‘14 – ‘15
Domestic cars -10.4 -5.4
Import cars -0.5 -0.9
Domestic trucks +16.0 +11.1
Import trucks +23.5 +16.0
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Other Bubbles?
• Oil? No, current OPEC policies appear aimed
at keeping new oil reserves off line, by keeping
prices low. If it raises its price, supply will likely
increase. Prices just fell below $30/barrel
• Housing prices in major cities? No.
• Yet, you may never see a bubble until it bursts
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Concerns: Sluggish international economies, with
some teetering on the edge of another recession and
China loosing steam
-4
-2
0
2
4
6
8
10
12
2010 2011 2012 2013 2014 2015
Percent Change in GDP over the Previous Year
JapanOECD Europe
China
U.S
Source: OECD.
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2014
Even though China continues to be a larger player in the world
economy, it’s share of the world equity market is quite small
Brazil
1%
China
2%
Japan
7%
Germany
3%
France
3%
UK
6%
US
52%
other
26%
Share of World Equity MarketBrazil
3%
China
13%
Japan
6%
Germany
5%
France
4%
UK4%
US
22%
other
43%
Share of World Economy ($US)
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Stimulus is still present: Even with the recent Fed
Funds hike, short-term interest rates are close to zero…
-10
1
2
3
4
5
6
2010 2011 2012 2013 2014 2015
A n n u a l p e r c e n t a g
e r a t e
Interest Rates and Inflation
3 month T-Bill New home mortgages
10 year T-Bill CPI-U 12-month change
Source: New York Federal Reserve and BLS CPI.6
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The Banking Situation Looks Calm
-30-20
-10
0
10
20
30
40
2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1
Federal Reserve Senior Loan Officers Survey:
Demand and Lending Standards for Commercial and Industrial Loans
by Medium-to-Large Firms
Reporting stronger loan demand Reporting tightening standards
Source: BEA and Federal Reserve.31
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One reason the Fed has been reluctant to raise rates is
the low inflation rate: below the Fed’s target of 2%.
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
1990 1995 2000 2005 2010 2015
Year-Over-Year Change in the PCE Price Index
Source: BEA PCE Price Index.32
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The value of the dollar has skyrocketed in recent
months…helps to keep down inflation but could be
trouble for manufacturing and other export-heavy sectors
5055
60
65
70
75
80
85
90
95
-60,000
-50,000
-40,000
-30,000
-20,000
-10,000
0
2010 2011 2012 2013 2014 2015
I n d e x
T r a d e B a l a n c e
U.S. Trade Balance and Nominal Index of the Value of the Dollar
against Seven Major Currencies
Trade balance Major currencies' dollar index
Source: BEA and Federal Reserve.
Biggest rally in 40 years
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Is the economy getting tired? Only 4 business cycles
have ever lasted longer than our current cycle of 96
months…and all but one occurred since 1960
90
100
110
120
130140
150
160
Q 1
Q 3
Q 5
Q 7
Q 9
Q 1 1
Q 1 3
Q 1 5
Q 1 7
Q 1 9
Q 2 1
Q 2 3
Q 2 5
Q 2 7
Q 2 9
Q 3 1
Q 3 3
Q 3 5
Q 3 7
Q 3 9
Q 4 1
Q 4 3
Real GDP Index
2007-present
2001-2007
1981-1990
1991-2001
1960-1969
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90
95
100
105
110
115120
125
130
135
M 1
M 6
M 1 1
M 1 6
M 2 1
M 2 6
M 3 1
M 3 6
M 4 1
M 4 6
M 5 1
M 5 6
M 6 1
M 6 6
M 7 1
M 7 6
M 8 1
M 8 6
M 9 1
M 9 6
M 1 0 1
M 1 0 6
M 1 1 1
M 1 1 6
M 1 2 1
M 1 2 6
Employment Index
1960-1969
1991-2001
2007-present
2001-2007
1981-1990
If we could replicate the 1990s, we could enjoy another 3 yearsof expansion before we’re the longest in US history
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At this stage of the business cycle, interest rates in other BCs
were considerably higher, which means those expansions were
sustainable without the extra stimulus this one is still receiving
0
2
4
6
8
10
12
14
16
18
20
M 1
M 6
M 1 1
M 1 6
M 2 1
M 2 6
M 3 1
M 3 6
M 4 1
M 4 6
M 5 1
M 5 6
M 6 1
M 6 6
M 7 1
M 7 6
M 8 1
M 8 6
M 9 1
M 9 6
M 1 0 1
M 1 0 6
M 1 1 1
M 1 1 6
M 1 2 1
M 1 2 6
Interest Rates
1960 Peak 1981 Peak 1991 Peak 2001 Peak 2007 Peak
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Summing up the national scene
• It is hard to find a cause for a recession in 2016—
strong fundamentals: GDP, jobs, confidence, debt
• However, there are some headwinds
– Sluggish international markets, particularly China’s slowinggrowth rate
– High value of the dollar could slow manufacturing and
other exports even more
– High value of the dollar will moderate inflation but thatcould prevent the Fed from raising interest rates, which
may be good now but not good if we head into another
recession
– Possible labor and skills shortages (perceived or actual) 37
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Michigan
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Michigan Employment Trends
• From 3rd Quarter 2014 to 3rd Quarter 2015,
employment increased by 90,000 jobs
– Manufacturers added 24,000 jobs during the
four quarters; US added only 126,000 – Michigan’s GDP grew 4.5% in Q2, 13th best in US
– If you are willing to assume an employment
multiplier for manufacturing of 3.8, all of thestate’s employment growth during the period
was due—directly and indirectly —to its
manufacturers
39Source: University of Michigan.
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Manufacturing clearly stands above
the other sectors in growth
Construction
Manufacturing
Wholesale
Retail trade
Transport., util.
Information
Finance
Real estate
Prof., tech.
Management
Admin. and support
Educ. services
Health care
Arts, ent., rec.
Hospitality
Other serv.
Government
-15
-10
-5
0
5
10
15
20
25
30
J o b c h a n g e ( 0 0 0 s )
Employment Change, Q3 2014 to Q3 2015
Source: BLS CES.40
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Again, possible skills shortages are not
reflected in higher wages
0
5
10
15
20
25
30
2007 2008 2009 2010 2011 2012 2013 2014 2015
H o u r l y w a g e ( $ )
Average Hourly Wage in Michigan, 2015 dollars
Source: BLS CES.41
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Michigan employment forecasted to grow over the
next 2 years but at a slightly slower pace than nation
2.1
1.7
1.6
2.2
1.4 1.5
0.0
0.5
1.0
1.5
2.0
2.5
2015 2016 2017
A n n u a
l p c t c
h a n
g e
Employment Forecast
United States Michigan
Source: University of Michigan RSQE & Upjohn Institute42
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The state’s unemployment rate continues to decline
and stands only a few points above the nation’s
0
2
4
6
8
1012
14
16
2000 2003 2006 2009 2012 2015
P e r c e n t o f l a b o r f o r c e
Unemployment Rate
43Source: BLS LAUS.
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Battle Creek MSA
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Manufacturing and health/education are big
drivers of the local economy
Mining, Logging,Const.
Manufacturing
Trade,
Transport., and
Util.
Financial
Prof. and
Business
Education &
Health
Leisure &
hospitality
Other Services
Government
-600
-400
-200
0
200
400
600
800
Employment Change, 2014 to Estimated 2015
45Source: BLS CES.
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The county’s unemployment rate is down to
2002 level and….
0
2
4
6
8
10
12
14
2000 2002 2004 2006 2008 2010 2012 2014
Unemployment Rate for Calhoun County
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November-to-November Change- Calhoun County
Year Labor Force Change
Employment
Change
Unemployment
Change
2011 -994 460 -1,655
2012 -132 518 -740
2013 424 623 -227
2014 1,706 2,649 -1,095
2015 359 895 -611
47Source: MI Labor Market Indicators, Local Area Unemployment Statistics.
It is for the right reasons – the unemployed andthose who had previously given up are finding jobs.
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80
85
90
95
100
105
110
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Nonfarm Employment Index (2000 = 100)
U.S. Michigan Battle Creek MSA
Source: BLS and Upjohn Institute, seasonally adjusted.16
The area lost 3,850 jobs
during the recession, but
gained 5,150, so far, in the
recovery
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45
55
65
75
85
95
105
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Manufacturing Employment Index (2000 = 100)
U.S. Michigan Battle Creek MSA
Source: BLS and Upjohn Institute, seasonally adjusted.18
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85
90
95
100
105
110
115
120
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Services Employment Index (2000 = 100)
U.S. Michigan Battle Creek MSA
Source: BLS and Upjohn Institute, seasonally adjusted.17
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But what about the area’s core industries?
How did they weather the storm?
• Time period of the analysis: 2004 to 2014
• Definition of the core: An industry that is at
least twice as concentrated in the Battle Creek
MSA than nationwide
• The question: Did these industries outperform
their national rivals?
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List of Core Industries
• Food manufacturing
• Printing
• Fabricated metal manufacturing
• Transportation equipment manufacturing
52
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Core Industries
Job change due only to the
area’s firms outperforming
their national rivals
Food -1,815
Printing 22
Fabricated metal 355
Transportation equipment 32
53
B l C k’ h i i h
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Battle Creek’s housing prices have so ways to go
before prices return to pre-recession levels
0
20
40
60
80
100
120140
160
180
200
1 9 9 5
1 9 9 6
1 9 9 7
1 9 9 8
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
FHFA Housing Price Index (1995=100)
54Source: FHFA Housing Index.
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High demand for healthcare workers
-200 -100 0 100 200 300 400 500 600 700
Food Prep and ServingPersonal Care and Service
EducationBusiness and FinancialArts, Design, Ent., etcConstruction
Sales and RelatedLife, Physical, and Social Science
Office and AdminProtective Service
ProductionHealthcare Support
Community and Social ServicesInstallation, Maintenance, and Repair
Computer and MathematicalArchitecture and Eng.
TransportationCleaning and Maintenance
ManagementHealthcare
Job Posting Change, 2014 to 2015, All Occupations
Source: BurningGlass Labor Insight
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Comparison Analysis
Comparison Areas:
• Altoona, PA
• Jackson, MI
• Johnstown, PA
• Lebanon, PA
• Mansfield, OH
• Monroe, MI
• Muncie, IN
• Springfield, OH
• Wausau, WI
• Williamsport, PA
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Comparison Criteria
• All one-county metropolitan areas
• Within Midwest region
• Not college town or state capitol
• All within 15% of Calhoun County’s population
(plus Jackson)
BC’ l t t li htl l th
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BC’s unemployment rate slightly less than
average for the 10 comparison areas
6.5
6.0
5.9
5.4
5.2
5.2
4.8
4.54.5
4.0
5.2
5.0
0 1 2 3 4 5 6 7
Johnstown, PA
Williamsport, PA
Muncie, IN
Mansfield, OH
Jackson, MI
Altoona, PA
Springfield, OH
Lebanon, PAMonroe, MI
Wausau, WI
Comparison Average
Battle Creek
Average Unemployment Rate, Jan –Nov 2015
Source: BLS.58
BC’ l h k i h f
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-0.9%
-0.5%
0.1%0.2%
0.5%
0.7%
1.4%
1.9%
2.0%2.3%
0.8%
2.3%
-1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5%
Lebanon, PA
Williamsport, PA
Altoona, PAJohnstown, PA
Mansfield, OH
Jackson, MI
Springfield, OH
Wausau, WI
Muncie, INMonroe, MI
Comparison Average
Battle Creek, MI
Percent Change in Total Employment,
Jan –Nov 2014 through Jan –Nov 2015
Source: BLS.59
BC’s employment growth keeps pace with faster
growing area
E t f M MI BC’ f t i
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8/20/2019 Economic Outlook 2016-17
61/80
-2.6%
-2.2%
-1.6%-1.0%
-0.7%
-0.1%
0.0%
2.3%
2.5%11.3%
0.8%
3.2%
-4% -2% 0% 2% 4% 6% 8% 10% 12%
Johnstown, PA
Springfield, OH
Williamsport, PAAltoona, PA
Lebanon, PA
Mansfield, OH
Muncie, IN
Wausau, WI
Jackson, MIMonroe, MI
Comparison Average
Battle Creek, MI
Percent Change in Manufacturing Employment,
Jan –Nov 2014 through Jan –Nov 2015
Source: BLS. 60
Except for Monroe, MI, BC’s manufacturing
employment outpaces the rest
-
8/20/2019 Economic Outlook 2016-17
62/80
Service sector employment growth also strong
-1.8%
0.2%
0.4%0.5%
0.5%
0.8%
1.0%
1.6%
2.1%2.3%
0.8%
2.2%
-2.0% -1.0% 0.0% 1.0% 2.0% 3.0%
Lebanon, PA
Johnstown, PA
Altoona, PAJackson, MI
Williamsport, PA
Mansfield, OH
Monroe, MI
Wausau, WI
Springfield, OHMuncie, IN
Comparison Average
Battle Creek, MI
Percent Change in Service Providing Employment,
Jan –Nov 2014 through Jan –Nov 2015
Source: BLS. 61
-
8/20/2019 Economic Outlook 2016-17
63/80
BC lags in attain of Bachelor’s Degrees or higher
17.3%
18.5%
19.3%
21.8%
22.6%
25.4%
26.4%
27.5%27.6%
29.5%
23.6%
17.9%
0% 5% 10% 15% 20% 25% 30%
Mansfield, OH
Springfield, OH
Jackson, MI
Monroe, MI
Lebanon, PA
Williamsport, PA
Johnstown, PA
Wausau, WIAltoona, PA
Muncie, IN
Comparison Average
Battle Creek
Percent of age group
Bachelor’s Degree or Higher, Age 25–34
Source: ACS 2010-14.62
-
8/20/2019 Economic Outlook 2016-17
64/80
… but not quite as much in Associate’s degees
8.1%
8.3%
9.0%
9.0%
9.2%
9.2%
11.5%
13.8%14.0%
15.8%
10.8%
11.2%
0% 5% 10% 15% 20% 25% 30%
Muncie, IN
Jackson, MI
Mansfield, OH
Springfield, OH
Lebanon, PA
Altoona, PA
Williamsport, PA
Monroe, MIJohnstown, PA
Wausau, WI
Comparison Average
Battle Creek
Percent of age group
Associate’s Degree or Higher, Age 25–34
Source: ACS 2010-14.63
G th i it l i l d
-
8/20/2019 Economic Outlook 2016-17
65/80
Growth in per capita personal income slowed
because of lower education level
3.0%
3.0%
3.1%
3.1%
3.8%
3.9%
4.0%
4.0%4.2%
5.2%
3.7%
2.6%
0% 1% 2% 3% 4% 5% 6%
Jackson, MI
Johnstown, PA
Lebanon, PA
Muncie, IN
Altoona, PA
Springfield, OH
Mansfield, OH
Monroe, MIWilliamsport, PA
Wausau, WI
Comparison Average
Battle Creek
Percent change
Pct Change in Per Capita Personal Income, 2013-2014
Source: BEA64
So What Is Our 2016 and 2017
-
8/20/2019 Economic Outlook 2016-17
66/80
So What Is Our 2016 and 2017
Employment Forecast for Battle Creek?
But wait, how did we do last year?
65
-
8/20/2019 Economic Outlook 2016-17
67/80
How did we do in 2015?
2.3% 2.7% 2.5%
1.2%
2.1%
4.4%
1.8%
-0.3%-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Total Goods producing Service providing Government
P e
r c e n t c h a n g e i n e m p l o y m e n t
Annual Percent Change in Employment
Current estimate Forecasted
66
-
8/20/2019 Economic Outlook 2016-17
68/80
Drum roll please . . .
67
But before that what did we consider in
-
8/20/2019 Economic Outlook 2016-17
69/80
But before that…what did we consider in
deriving the forecast?
68
-
8/20/2019 Economic Outlook 2016-17
70/80
Pretty flat here…
0
10
20
30
40
50
60
70
80
2000 2002 2004 2006 2008 2010 2012 2014
Number of Dwelling Units Put Under Contract for Construction(SAAR*)
New dwelling units 12-month moving average
69*Seasonally adjusted annual rateSource: Dodge Data and Analytics.
-
8/20/2019 Economic Outlook 2016-17
71/80
Not much happening here…
0
50
100
150
200
250300
350
400
450
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Construction Permits Issued, Calhoun Co.
Total, All Structure Types Single Family Houses
70Source: U.S. Census.•Year to date, November 2015
Brian Long’s PMI Is stable but there are signs of
-
8/20/2019 Economic Outlook 2016-17
72/80
Brian Long s PMI Is stable, but there are signs of
slippage
0
10
20
30
40
50
60
70
80
2008 2009 2010 2011 2012 2013 2014 2015
Purchasing Managers Index
Purchasing Managers Index 12-month moving average
71Source: National Association of Purchasing Management.
-
8/20/2019 Economic Outlook 2016-17
73/80
Real wages have been flat since 2000…
0200
400
600
800
1,000
1,200
1,400
A v e r a g e w e e k l y w
a g e ( $ )
Total Nonfarm Wages (2015 Dollars)
Michigan Battle Creek MSA
Source: Michigan LMI and BLS CPI.72
-
8/20/2019 Economic Outlook 2016-17
74/80
… and wages in manufacturing are weakening
0200
400
600
800
1,0001,200
1,400
1,600
1,800
A v e r a g e w e e k l y w
a g e ( $ )
Manufacturing Wages (2015 Dollars)
Michigan Battle Creek MSA
54Source: Michigan LMI and BLS CPI.
Brian Long’s PMI Is stable but there are signs of
-
8/20/2019 Economic Outlook 2016-17
75/80
Brian Long s PMI Is stable, but there are signs of
slippage
0
10
20
30
40
50
60
70
80
2008 2009 2010 2011 2012 2013 2014 2015
Purchasing Managers Index
Purchasing Managers Index 12-month moving average
74
Source: National Association of Purchasing Management.
-
8/20/2019 Economic Outlook 2016-17
76/80
And now…at last…the forecast
75
Battle Creek MSA REVISED
-
8/20/2019 Economic Outlook 2016-17
77/80
Battle Creek MSA -REVISED
2016 –2017 Preliminary Forecast
2.3%
2.7%2.5%
1.2%
1.6%
2.2%
1.6%
0.4%
1.3%
0.8%
1.6%
0.8%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
Total Goods producing Service providing Government
P e r
c e n t c h a n g e i n e m p
l o y m e n t
Annual Percent Change in Employment
2015 2016 2017
76
Employment growth in 2016 will be faster than
-
8/20/2019 Economic Outlook 2016-17
78/80
Employment growth in 2016 will be faster than
the state’s
2.1
1.71.6
2.2
1.4 1.5
2.3
1.6
1.3
0.0
0.5
1.0
1.5
2.0
2.5
2015 2016 2017
A n n u a
l p c t c
h a n
g e
Employment Forecast
United States Michigan Battle Creek MSA
Source: University of Michigan RSQE & Upjohn Institute
-
8/20/2019 Economic Outlook 2016-17
79/80
Parting Thoughts
• US, Michigan, and Battle Creek are in a relativelygood position with basically strong fundamentals
• It is highly unlikely that the economy will turn
negative in 2016. However, it could slow due to: – Sluggish international markets
– Dramatic drop in consumer confidence
– Continued obsession with China
– Fiscal austerity: lessons from Europe – Unforeseen events
• Of course, 2016 is an election year and …
78
-
8/20/2019 Economic Outlook 2016-17
80/80
The 2016 –2017 Employment Forecast for
Battle Creek MSA
Randall Eberts
Brian Pittelko
W.E. Upjohn Institute for Employment Research
January 14, 2016
Can it get any better than this?