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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
2
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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
9
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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.
10
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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
20Source: BLS LAUS and Upjohn Institute.
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)
United States Michigan Calhoun County
21Source: BLS LAUS and Upjohn Institute.
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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)
United States Michigan Calhoun County
22Source: BLS LAUS and Upjohn Institute.
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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)
26
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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
Comparison AverageBattle Creek, 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
Comparison AverageBattle Creek, MI
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
Comparison AverageBattle Creek, 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