The Top Three Takeaways from the 2022 Economic Outlook

On December 9, 2021, over 400 key leaders from the greater Grand Rapids region logged onto a Zoom call for our 25^th Annual Economic Outlook. Viewers of the event heard from The Right Place president & CEO, Randy Thelen, and Regional Economic Specialist from the University of Michigan, Don Grimes. The question on everyone’s mind was, “What can I expect the economic forecast to be for 2022?”

Our goal for this event is to help prepare business leaders for success in the coming new year. Randy was able to offer a true “feet-on-the-street” perspective of what to expect right here in our local communities, while Don provided a macro-level update and how it relates back to our region.

Read on to see an update from The Right Place on their current strategic plan, and to view the top three takeaways from the event.

The Right Place Results

We put forward a strategic plan on three-year increments. Last year was difficult to meet our objectives due to the emergence of COVID-19 and its impact on the economy in 2020. Because of this, we were behind the curve in terms of our objectives of new and retained jobs, new and retained payroll and new capital investment. Thankfully in 2021, our business community made bold decisions and as a result we are now ahead of plan on every one of our core metrics.

Local businesses are confident heading into 2022

The Right Place met with 422 companies in 2021, and from those conversations we’ve learned the local business community is confident in our region’s future. The overwhelming majority believe our region is competitive (94%), and more than half are planning to expand in the near future (63%). They have a positive outlook despite the labor shortage and ongoing pandemic, and many are making investments into training (52%).

On a larger scale, an “almost complete recovery” in employment numbers is expected in Michigan by the end of 2023 with blue collar industries leading the way. Our region has also closed the gap when it comes to income, now growing at the same rate as the rest of the state, with an expected increase of 17% by the end of 2023. However, our average wages continue to lag.

What else makes us feel confident? Knowing that people want to live here! West Michigan provides a good quality of life, and employment is increasing faster than the population. Our area is attracting more jobs than people at the moment, becoming a center of employment, and hopefully drawing people to relocate to Grand Rapids for better opportunities.

The labor shortage is persistent

Multiple factors are driving the labor shortage, and the pandemic has accelerated these trends. It has also magnified barriers to working for some of the population, such as childcare. The overall labor force participation rate is falling, birth rates are down, and boomers are retiring fast. Labor demands are at record high levels, and Grand Rapids’ demands are 60% higher than they were pre-COVID. Communities and businesses who can find new ways to re-engage the workforce will come out on top.

The labor force participation rate has dropped 3.2% since February 2020, which corresponds to roughly 33,000 less people in the workforce. There are also roughly 32,000 unemployed workers today, about 8% more than in February 2020. This means there are about 65,000 people out there that have potential to re-enter the workforce. As companies make decisions about where to grow and where to invest, we have a large pool of people to show that there is an available workforce. We just need to find out what prevents them from re-entering. What are the cultures or systems in place that are preventing or hindering people from returning? Some local companies are recognizing this shift in workplace culture and values and are responding by investing in training and finding new ways to engage with current and prospective employees.

Opportunity is here

Our economy is tracking towards recovery from the COVID-19 pandemic. We have record numbers of stimulus dollars being deployed in our communities, and we have to capitalize on this once in a lifetime opportunity. We must keep building on the momentum that our region has seen these past few years. The Right Place is moving forward aggressively to position our community for future continued growth by focusing on five key initiatives:

1. Talent & diversity
   • We currently fall short of providing employment, wage and business startup opportunities for communities of color. We are working with partners such as Urban League, Hispanic Center, Hispanic Chamber of Commerce, Goodwill Industries and others to help harness and elevate diverse talent.
2. Site readiness for next wave of development
   • We need to increase our region’s shovel ready sites in order to compete and win future job growth opportunities.
3. Regional technology strategy
   • Tech is currently the fastest growing sector, and our region is slightly underperforming in this area. Tech workers make up 5% of our workforce, whereas similar Midwest communities have higher proportions, such as Indianapolis (7%) and Cincinnati (7.4%).
4. Industry 4.0/5.0
   • This is where mechanical and digital converge in the manufacturing sector. Our manufacturing services team is actively engaging our region’s employers to increase efficiencies and productivity via these new technologies.
5. Placemaking
   • As we think about the recent shift to remote work, people have the opportunity to live in one area and work in another. Because of this, we need to continue to invest in our communities to make them unique and attractive so that when talent decides where they want to be, they choose West Michigan.

This a cloudy time of economic recovery due to the pandemic, however a good forecast is expected for 2022. We’re looking at continued strong economic growth for our region. It will slow after the second quarter of next year, which will lead to a decline in the inflation rate, increase in interest rates and a drop in unemployment.

During the event Don stated himself that, from an economic perspective, things are “pretty rosy” for the state of Michigan, the nation, and particularly the Grand Rapids region for 2022.

Did you miss The Right Place's Economic Outlook for 2022? You still have the option of purchasing the video recording here.