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1.05.17 – Luncheon Notes

SPOKES Notes written by Paul Arnold

President Michael called the meeting to order and announced upcoming events including the social at his house.

After the song and invocation, Michael highlighted the Rotary involvement in the Rose Bowl parade and the winning of two parade awards. He also noted the upcoming Service Above Self Award dinner.

Derek Alten announced the kick-off of the Service Above Selfie photo contest. Any organization can take a group photo of a service project and submit it for consideration of the $5000, $2000 or $1000 awards.

One does not have to be a Rotary member to submit. All that is needed is to post a “selfie” on Facebook, Twitter, Instagram or LinkedIn with the hashtag #serviceselfie or #rotarygr. Rotary Grand Rapids will share the photos at www.serviceselfie.com and pick a list of finalists in early March.

President Michael introduced our speaker, Dr.Paul Isley, the Associate Dean of the Seidman College of Business at GVSU. He was Chair of the Econ. Department since 2009. He has a Ph.D. in Economics from Purdue University and also holds an M.S. in Economics from Purdue University and a dual B.S. in Physics and Economics from the University of Wisconsin-Madison. He is the author of a major report on the economy of the Huron River.

Dr. Isley began his presentation by noting that he predicted an growth level of 2.6% for 2016 and the actual results were close at 2.4%. US GDP forecast for 2017 are expected to be 1.8% to 2.4% but some economists are starting to revise those predictions up. Dr. Isley suggested that recessions can be looked at when potential GDP is above actual GDP. Recessions are cyclical in nature so the next potential recession is not anticipated for at least 18 months to 2 years from now. With no recession, 2017 will be a year where wages will go up for those that already have decent jobs. It will be a year of low unemployment and “quit rates” back to normal levels. The U-6 unemployment rate (a broader rate than is generally reported in the media) which is now at 9.3%, will continue to drop. From 1994 to 2007, that rate hovered at around 8.9%.  Debt service compared to income is now at record low levels.

West Michigan will continue to see growth—but at a slower pace. The constraints are for companies to find enough qualified people and good facilities. KOMA (the four county area including Kent) will see a slowdown in employment even though sales have been OK. Retail sales in Michigan were good in 2015 but not as good for 2016. Wage growth will continue to decline in the manufacturing arena but increase in the service sectors—health care in particular. There has been, and will continue to be higher growth for newer companies.

Housing prices are increasing faster for high-end homes than mid-to low-end dwellings. Low end houses are just now getting back to 2005 levels and will continue to see increases next year. Building permits are at high levels now but not like the “Bubble” years. Vacancy rates for business and residential buildings are well below the national levels. A big concern for this area will continue to be a lack of educated and qualified workers.

Q&A

The trade policies of the Trump administration has many area businesses worried.

The strengths of West Michigan will continue to be more “green buildings”, high occupancy rates and a strength in retail activity in some corridors.

Manufacturing will continue to see more automation. A steel mill in China just went on-line that employs only 400 workers that use to take 5000 for the same output.

The US needs a more educated workforce. West Michigan is doing better than the national average. Muskegon is in the top 5 of all US MSA’s for tech workers.

Trade sanctions will be a major problem for West Michigan companies.

Wage growth for Blacks and Hispanics are starting to match that of White workers.

Income from wages will grow faster than income from investments.

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