GRAND RAPIDS, Mich. — Experts predict West Michigan’s economy will grow in 2024 but at a rate slower than years past.
On Wednesday, Paul Isely, the associate dean of the Seidman College of Business at Grand Valley State University, released his annual Grand Rapids Economic Forecast, which provides insight on the city and Kent County’s economy for the year.
In 2024, Isely says to expect to see the following:
- The Current Business Confidence Index for the end of 2023 is 72%, higher than expected last year.
- The Forecast Business Confidence Index for 2024 is 68%, showing reduced expectations for 2024.
- Employment is expected to grow by 1.4% to 1.7% in 2024, indicating slower growth than 2023
- Wages are expected to increase by 3.5% to 3.7% for 2024 which is much slower than the increases seen in 2023
- Overall nominal sales are expected to increase by 2.3% to 2.8% for 2024, consistent with growth in 2023
According to the report, the primary concern going into 2024 is that, adjusted for inflation, the excess savings for consumers was used up by the end of 2023 and now consumption is increasingly debt driven.
Isely and his team say it could lead to a slowdown if consumers start to pull back on spending to a more sustainable level.
“Consumers under the age of 40 are getting stretched,” said Isely. “They've borrowed money, they are getting late on [payments], their incomes haven't gone up quite as fast as they need them to, and they've had to buy expensive things that have high interest rates.”
He added, “People over the age of 40 have have more wealth, right now. That gives them the ability to buy a car so it should stabilize car sales this year. We do know that interest rates will be going down and that will help with purchasing a house or actually breaking loose some of the houses that people have been unwilling to sell.”
Isely says people in their 30s continue to move to the area though which, coupled with some policy decisions, would energize growth in the economy.
“When the Census does surveys of people about why they aren't in the workforce, we're still seeing between 4-6% of the people [are] out because of lack of good childcare, or eldercare,” said Isely. “That's something that can be attacked. We… bring international immigration into our area at a much slower rate than other cities our size. If we matched what other cities were doing, that would add 1% to our growth. If we handled the childcare that would add 1% to our growth. If we had enough housing that people could actually move here, that would add 1-3% to our growth so there's lots of things that we can do right now to help that.”
Isely encourages local leaders to act.
“That generates lots of wealth that spins off into the economy, and has a lot of positive impacts for us,” said Isely.
To read the full report, click here.
