GRAND RAPIDS — Although still positive, the recovery for the West Michigan industrial economy has slowed considerably in recent weeks, according to a GVSU economist.
Brian G. Long, director of Supply Management Research in the Seidman College of Business at Grand Valley State University, said the slowdown is expected at this stage of an economic recovery because of pent-up demand.
Long said the worldwide chip shortage is hampering auto production for almost every nameplate in the world. Dealer lots are predominately empty and Long said it may be 2022 before supply catches up with demand.
Highlights from Long’s economic report:
- New orders, the index of business improvement, came in at +14 – typical of the recovery from most recessions once the initial pent-up demand has been satisfied.
- The on-going chip shortage has washed backward into the automotive supply chain, causing slowdowns or temporary stoppages in production. The production index tapered to +11.
- Staffing continues to be a major problem for many firms, even though some have raised their starting wage and offered signing bonuses. Many economists are concerned about a wage-price spiral.
- Despite the Covid Delta Variant, the JPM international survey posted at 54.1, only a little below the all-time high of 56 set in May. The supply chains of the world continue to show no sign of returning to normal.
- The employment index remained positive at +19, but would be stronger if there were people to hire. With some of the generous unemployment benefits coming off line, there is speculation that the employment situation will improve in coming months.