economic outlook 2016-17

8/20/2019 Economic Outlook 2016-17

1/80

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?


2/80

A Special Thanks to …

1

…for their sponsorship.


3/80

Why am I here…and not this guy?

2


4/80

The answer…

Retirement and…

…a new grandson 3


5/80

" ," 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.

4


6/80

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.

5


7/80

The news last week wasn’t new—slowing Chineseeconomy, but another bad week for China’s stock market..

6


8/80

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

7


9/80

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)

8


10/80

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 …

9


11/80

National

10


12/80

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

11


13/80

-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

12


14/80

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

13


15/80

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

14


16/80

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.


17/80

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

16


18/80

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.

17


19/80

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


20/80

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.

19


21/80

What about possible bubbles?

20


22/80

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.

21


23/80

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

22


24/80

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


25/80

…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.


26/80

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!

25


27/80

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


28/80

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

27


29/80

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.

28


30/80

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)

29


31/80

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


32/80

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


33/80

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


34/80

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

33


35/80

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

34


36/80

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

35


37/80

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

36


38/80

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


39/80

Michigan

38


40/80

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.


41/80

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


42/80

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


43/80

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


44/80

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.


45/80

44

Battle Creek MSA


46/80

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.


47/80

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

46Source: BLS LAUS and Upjohn Institute.


48/80

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.


49/80

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


50/80

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)




51/80

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)




52/80

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?

51


53/80

List of Core Industries

• Food manufacturing

• Printing

• Fabricated metal manufacturing

• Transportation equipment manufacturing

52


54/80

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


55/80

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.


56/80

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


57/80

Comparison Analysis

Comparison Areas:

• Altoona, PA

• Jackson, MI

• Johnstown, PA

• Lebanon, PA

• Mansfield, OH

• Monroe, MI

• Muncie, IN

• Springfield, OH

• Wausau, WI

• Williamsport, PA


58/80

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


59/80

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


60/80

-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


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,


Source: BLS. 60

Except for Monroe, MI, BC’s manufacturing

employment outpaces the rest


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,


Source: BLS. 61


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


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


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


66/80

So What Is Our 2016 and 2017

Employment Forecast for Battle Creek?

But wait, how did we do last year?

65


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


68/80

Drum roll please . . .

67

But before that what did we consider in


69/80

But before that…what did we consider in

deriving the forecast?

68


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.


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


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.


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


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


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.


76/80

And now…at last…the forecast

75

Battle Creek MSA REVISED


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


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


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


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?

economic outlook 2016-17

Documents