Tag Archives: Recession

Economy flattens as GVSU expert predicts ‘shallow recession’ coming

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By Chris Knape
Grand Valley State University

Energy costs may offset lower costs in other areas. (pxhere.com)

The West Michigan economy appears to have flattened, but has not yet contracted into a recession, according to the latest monthly survey data released by Grand Valley State University’s Seidman College of Business.

The September survey of purchasing managers conducted by Brian Long, director of supply chain research at GVSU, found steady demand among automotive suppliers offsetting more negative news about orders coming from sectors like the office furniture industry.

“Of our cyclical industries in West Michigan, our automotive parts producers are continuing to stay fairly busy, but not so much so with our office furniture companies and anything related to capital equipment where the markets are starting to soften — not collapse — just soften,” Long said.

Lower commodity prices for goods like metals and plastic resins will take months to find their way into consumer prices, while energy costs could offset lower costs in some areas, he said.

For the survey, released Oct. 10, the sales/new orders index was flat in September after going into negative territory in July and August.

Production levels were also flat, with a majority of survey respondents reporting output being the same as it was in August.

Long said he’s about 80 percent certain the region is sliding into a “shallow recession,” based on the national trends and feedback he hears from inside the region’s industrial employers.

“The confidence situation has clearly worsened the short-term business outlook index for September,” he said. “However, the long-term business outlook, which queries perceptions for the next three to five years, still remains positive, just not nearly as strong as it was six months ago.”

West Michigan economy flattens, but is it a recession?

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By WKTV Staff
joanne@wktv.org

Brian Long is a local business forecaster. Credit: GVSU

West Michigan’s economy has flattened, following a national and worldwide trend, according to a report released Monday by Brian G. Long, director of Supply Management Research at Grand Valley’s Seidman College of Business.

So, is the nation in a recession?

Long said he’s not quite ready to say so, given the complexities that go into determining when a recession begins or ends. However, he does think the nation is “very likely to slide into an official recession in the near future.”

“I’m sticking with an 80 percent likelihood of recession right now because, the future being what it is, things could change,” he said. “There’s a possibility that we might skate by, but it’s growing increasingly unlikely as time goes by.”

The key sales index, indicating new orders, sank into negative territory, according to the results of the survey of West Michigan manufacturers.

“Although many factories are still operating at or near capacity, higher commodity prices and rapidly rising transportation costs continue to restrict the profitability for many firms,” Long said in the report. “Even though business conditions remain modestly positive for some survey respondents, the talk of an impending recession is resulting in many expansion plans being put on hold.”

Automotive suppliers, though still hampered by chip shortages, are expected to weather any economic storm better than other sectors due to continued pent-up demand for new cars, Long said.

Key metrics in the July survey were a mixed bag:
•    The sales index, reflecting new orders came at -3 after being +26 in June
•    Production, or output, softened to +7 from +31 in June
•    Employment remained strong, reaching +27, up from +23 the previous month

Long cautioned against putting too much weight on the nation’s Gross Domestic Product (GDP) in determining the start of a recession.

While economists once used two consecutive quarters of negative GDP reports as a signal of the start of a recession, thinking has evolved in recent decades to include other factors such as income, employment, unemployment, industrial production, capital investment and consumer spending, he said.