erickcek presentation

8/10/2019 Erickcek Presentation

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2015 and 2016 Economic Outlookfor Calhoun County

George A. ErickcekBrian Pittelko

W.E. Upjohn Institute for Employment Research

January 15, 2015


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Thanks to Our Sponsors

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Outline

The national economy is speeding forward on$2.00 per gallon gasoline and low interestrates

Robust car and truck sales are fuelingMichigans economy

Calhoun County had a good year in 2014 Forecast: continued employment growth

3


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GDP Grew by a Robust 5.0 Percent in the Third Quarter,and Forecasters Are Promising Continued Growth

4

-2,500

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

-6

-4

-2

0

2

4

6

09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1

E m p

l o y m e n t c h a n g e

( 0 0 0 s )

P e r c e n t a g e c h a n g e i n G

D P

Gross Domestic Product and Nonfarm Employment

GDP Nonfarm employment

Forecast

Employment gains have been outstanding,more than 800,000 jobs in the fourth quarter.

Source: BLS, BEA, University of Michigan RSQE.


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Employment Conditions Have Improved; the Numberof Job Seekers Per Opening Has Dropped Below 2

5

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

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

Source: BLS.


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Prices and Interest Rates Remain Low:Prices may be too low but who is complaining about

$2.00 per gallon gas?

6Source: Federal Reserve, BLS.

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2009 2010 2011 2012 2013 2014

A n n

u a l p e r c e n t a g e r a t e

Interest Rates and Inflation

30-year mortgages10-year Treasury bill

3-month Treasury bill

12-month change in CPI-U


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Consumer Confidence Is Rising Despite StagnantWages; However, Other Polls Have Not Been as Positive

010203040506070

8090100

05

101520253035

404550

2009 2010 2011 2012 2013 2014

C o n s u m e r C o n

f i d e n c e I n

d e x

$ P e r

h o u r 2 0 1 4

d o l l a r s

Real Hourly Earnings and Consumer Confidence

Real hourly earnings Consumer confidence

Source: Conference Board and BLS. 7


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So Lets Sum Up

8

The national economy was surprisingly strong in thethird quarter and continued growth is forecasted

Inflation and interest rates are low and expected to

stay low. Gas prices 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 willlikely keep interest rates low On the negative side, the nation is standing alone in

the global economy


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Michigan Forecast

Strong auto sales are pushing the state forwardand most are forecasting that auto sales willremain high until at least 2017

The states unemployment is down to pre -recession levels but still higher than the nations

Employment growth is expected in 2015 and2016

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In 2014, State Employers AddedNearly 30,000 Workers

Mining, logging,const.

Manufacturing

Wholesale

Retail

Transport. and

util.

Information

Financialactivities

Prof. andbusiness

Education andhealth

Leisure and

hospitality

Other services

Government-6

-4

-2

0

2

4

6

8

10

12

14

Employment Change, 2013 to 2014 (in thousands)

Source: BLS CES.

If you are will to accept a 2.8 manufacturingemployment multiplier, manufacturers are driving theentire state economy.

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Auto Sales Continue to Pick Up and Are Forecastto Drive Past 16 Million Units in 2015 and 2016

0

2

4

6

8

10

12

14

16

18

20

22

24

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

11Source: BEA.

Strong sales years are expectedin 2015 and 2016; and whatabout $2.00 per gal gas?


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The States Unemployment Rate Is Back to Pre -recession Levels and Now Stands at 7.1 Percent

0

2

4

6

8

10

12

14

16

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

P e r c e n t o

f l a b o r

f o r c e

Unemployment Rate

12Source: BLS LAUS.


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Latest University of Michigan EmploymentForecast for the State Is Very Bullish

Employment forecast:

2015 50,250 jobs2016 52,140 jobs

13Source: University of Michigan RSQE Nov, 2014.


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Calhoun County 2014 was a strong year for manufacturing

employment growth The countys unemployment rate is down to

5.3 percent (seasonally unadjusted) The countys overall economic performance

was similar to its peers Why isnt the countys service sector doing

better? Forecast for 2015 and 2016 -- Good news

14


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Again, the Employment Gains in ManufacturingMore than Offset Losses in Government

Mining, logging,and const.

Manufacturing

Trade,transport., and

util.

Financial

Prof. andbusiness

Education andhealth

Leisure andhospitality

Other services

Government-600

-400

-200

0

200

400

600

800Employment Change, 2013 to Estimated 2014

16Source: BLS CES.


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Auto Suppliers Are Supplyingthe Growth

Food

Printing

Chemical

Plasticsand rubber

Nonmetallicmineral

Primary metal

Fabricated metal

Machinery

Elec. equip

Transportation

Misc.

-1,000

-800

-600

-400

-200

0

200

400

600

800

Manufacturing Employment Change, Q1 2013 to Q1 2014

17Source: BLS QCEW.


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The Countys Unemployment Rate isDown to the 2002 level and.

0

2

4

6

8

10

12

14

2000 2002 2004 2006 2008 2010 2012 2014

Unemployment Rate for Calhoun County

18Source: BLS LAUS and Upjohn Institute.


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November-to-November Change, Calhoun County

Year Labor Force ChangeEmployment

ChangeUnemployment

Change

2011 -1,281 243 -1,735

2012 139 728 -680

2013 674 759 91

2014 1,018 2,082 -1,243

19Source: 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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Calhoun County Has Bounced Back from theRecession in Terms of Job Growth

80

85

90

95

100

105

110

2000 2002 2004 2006 2008 2010 2012 2014

Total Employment Index(2000=100)

United States Michigan Calhoun County


The county lost 3,800 jobs

during the recession andgained 4,300 jobs, so far in therecovery.


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The Countys Service Sector Has Also Regained Its Losses;However at a Much Slower Pace than the Nation

80

8590

95

100

105

110

115

120

2000 2002 2004 2006 2008 2010 2012 2014

Private Services Employment Index(2000=100)




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Outstanding Manufacturing Growth

45

55

65

75

85

95

105

2000 2002 2004 2006 2008 2010 2012 2014

Manufacturing Employment Index(2000=100)




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Not Surprising, Manufacturers Had theLargest Increase in Job Postings for the Year

-100 0 100 200 300 400 500

Health careAdmin. and supportProf., sci., and tech.

FinanceMiningAgriculture

Wholesale tradeManagement

InformationConstruction

Other servicesReal estate

Arts, ent., and rec.Public administrationTransport. and warehouse

Educational servicesHospitality

Retail tradeManufacturing

Job Posting Change, 2013 to 2014, All Industries

Source: BurningGlass Labor Insight. 23


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However for Individual Occupations, theIncrease in Job Postings Is More Diversified

-200 -100 0 100 200 300 400

Health careBusiness and financial

ManagementProtective service

Life, physical, and social scienceCommunity and social servicesComputer and mathematical

Health care supportArchitecture and eng.

ConstructionCleaning and maintenance

Personal care and serviceArts, design, ent., etc.

EducationOffice and admin.Production

Installation, maintenance, and repairTransportation

Food prep. and servingSales and related

Job Posting Change, 2013 to 2014, All Occupations

Source: BurningGlass Labor Insight. 24


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Comparison Analysis

Altoona, PA Jackson, MI Johnstown, PA Lebanon, PA Mansfield, OH

Monroe, MI Muncie, IN Springfield, OH Wausau, WI Williamsport, PA

25

Comparison Areas:


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Comparison Criteria

All one-county metropolitan areas Within Midwest region

Not college town or state capitol All within 15% population of Calhoun County

(plus Jackson)

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-0.5%-0.2%

0.1%0.3%

0.6%1.3%

1.8%2.1%

2.4%3.3%

1.1%1.3%

-1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%

Jackson, MIJohnstown, PA

Wausau, WIMansfield, OH

Altoona, PALebanon, PAMonroe, MI

Williamsport, PASpringfield, OH

Muncie, IN

Comparison AverageBattle Creek, MI

Percent Change in Total Employment,Jan Nov 2013 through Jan Nov 2014

Source: BLS. 27

Par for the Course


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Again, Right in the Pack

4.65.25.2

5.5

5.96.2

6.66.7

6.9

7.26.0

6.2

0 2 4 6 8

Lebanon, PASpringfield, OH

Altoona, PAWausau, WI

Williamsport, PAMansfield, OHJohnstown, PA

Monroe, MIMuncie, IN

Jackson, MIComparison Average

Battle Creek, MI

Average Unemployment Rate, Jan Nov 2014

Source: BLS.


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-5.3%-2.7%

-2.2%-1.8%

-1.5%-0.8%

-0.5%0.8%

2.7%3.3%

-0.8%5.6%

-6% -4% -2% 0% 2% 4% 6% 8%

Johnstown, PAMuncie, IN

Mansfield, OHLebanon, PA

Altoona, PAWilliamsport, PA

Wausau, WISpringfield, OH

Monroe, MIJackson, MI


Percent Change in Manufacturing Employment,Jan Nov 2013 through Jan Nov 2014

Source: BLS. 29

Clearly, the Countys ManufacturingGrowth Is Uniquely Strong


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This Is the Challenge and ClearlyJackson Is Not the Problem

-1.4%-0.2%-0.1%

0.3%

0.5%0.8%

1.3%1.6%

2.3%4.1%

0.9%-0.2%

-2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%

Jackson, MIMonroe, MI

Johnstown, PAWausau, WI

Mansfield, OHAltoona, PA

Williamsport, PALebanon, PA

Springfield, OHMuncie, IN


Percent Change in Service-Providing Employment,Jan Nov 2013 through Jan Nov 2014

Source: BLS. 30


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To Me, This Is a Welcome Surprise andWarrants Further Research

14.5%15.3%

16.3%

16.7%17.0%

17.8%18.1%18.3%18.4%

21.8%17.4%

22.1%

0% 5% 10% 15% 20% 25%

Johnstown, PAWausau, WI

Williamsport, PA

Springfield, OHMuncie, IN

Lebanon, PAMonroe, MI

Mansfield, OHAltoona, PAJackson, MI


Percent of industry

Self-Employed Professional, Scientific Technical Employed

Source: ACS 2013. 31


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However, for Bachelor Degrees the CountyStill Lags BehindNationwide, It Is 33 Percent

15.5%18.0%

18.5% 21.3%

21.9%23.7%

25.4%25.7%

27.5%

27.8%22.5%

18.7%

0% 5% 10% 15% 20% 25% 30%

Mansfield, OHJackson, MI

Springfield, OHMonroe, MILebanon, PA

Williamsport, PAWausau, WI

Johnstown, PAAltoona, PA

Muncie, INComparison Average

Battle Creek, MI

Percent of age group

Bachelors Degree or Higher, Age 25 34

Source: ACS 2013. 33


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Exploring Reasons Why EmploymentTrends in Services Are So Lackluster

Services depend upon the population growthand current building permit data suggestslittle to no growth

Housing prices show no new demand forhome purchases

More than 50 percent of people working inthe Battle Creek area commute from outsidethe region

34


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Price Trends Strongly Suggest There IsSimply a Lack of Demand For New Housing

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

FHFA Housing Price Index (1995=100)

36Source: FHFA Housing Index.


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About 57 Percent of Workers in the BattleCreek Area Commute from Outside

Source: Census On the Map 2011.Area includes Battle Creek, Springfield, Bedford, Pennfield, and Emmett Townships

37

The Percent of Workers Commuting into the


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The Percent of Workers Commuting into theArea Is Approximately the Same Regardless of

Age or Income

0

10

20

30

40

50

60

70

Less than$1,250

$1,250 to$3,333

$3,333and

higher

P e r c e n t o

f w o r k e r s

Commuters Pct. of Income

0

10

20

30

40

50

60

70

29 andyounger

30 to 54 55 and over

Commuters Pct. of Age

Source: Census On the Map 2011. 38


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Review of Last Years Forecast: Not BadBecause of Offsetting Errors

1.1%

4.8%

0.5%

-2.6%

1.5%2.4%

1.6%

-0.3%

-3.0%-2.0%

-1.0%

0.0%

1.0%

2.0%3.0%

4.0%

5.0%

6.0%

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

Current estimate Forecasted

40

2014 Employment Growth


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Battle Creek MSA EmploymentForecast for 2015 and 2016

1.1%

4.8%

0.5%

-2.6%

2.1%

4.4%

1.8%

-0.3%

1.6%

2.7%

1.7%

-0.1%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Total Goods producing Service providing Government

Annual Percent Change in Employment

2014 2015 2016

41


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So What Keeps Me up at Night?

The global economy The U.S. is the onlygame 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 theirkids as well

The continued mystery of why employmentgains in manufacturing have a very smallimpact on service employment in Battle Creek

42

2015 d 2016 E i O tl k


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2015 and 2016 Economic Outlookfor Calhoun County

George A. ErickcekBrian Pittelko

W.E. Upjohn Institute for Employment Research

January 15, 2015

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