GVSU expert: West Michigan economy better but still flat

Brian G. Long’s monthly survey report highlights supply chain bottlenecks, inflation.
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Brian Long. Courtesy Grand Valley State University

(As seen on WZZM 13) West Michigan’s economy remains plagued by supply chain issues, a new report finds.

In West Michigan and across the country, supply chain problems have resulted in longer lead times, missed deliveries, higher prices and sometimes exorbitant expediting charges, said Brian G. Long, director of supply management research in the Seidman College of Business at Grand Valley State University.

Long surveyed local business leaders and the findings in his report, published Nov. 8, are based on data collected during the final two weeks of October.

“What seems most worrisome to some of our survey participants is that there is still no end in sight for our supply chain problems,” Long said. “Although these supply chain gremlins are inhibiting the West Michigan economy, modest economic growth continues.”

Most automotive manufacturers are extremely frustrated by the fact they cannot build or ship most of their cars because of a shortage of $15 worth of computer chips, Long said.

“Throughout the chip crunch, automakers have prioritized output of large pickups, some of the industry’s most profitable vehicles,” he said. “Ford and Ram are among automakers offering 0% financing for 72 months on large pickups. At the same time, competition in the segment is increasing, with a redesigned Toyota Tundra and the industry’s first electric pickup, the Rivian R1T, on the horizon.”

On the subject of inflation, Long said the Federal Reserve still is sticking with its theory that the current inflation is “transitory.”

“They won’t say how long before we can expect to transition out of the high inflation we are currently experiencing,” he said.

According to the Bureau of Labor Statistics on Nov. 10, consumer prices surged at the fastest pace in more than three decades in October as fuel costs picked up, supply chains remained under pressure and rents moved higher — worrying news for economic policymakers at the Federal Reserve. Overall prices rose 6.2% over the past 12 months, the fastest pace since 1990, and inflation began to accelerate again on a monthly basis.

Highlights of Long’s October report:

  • The Index of Employment remained positive at +24, down from +27.
  • New orders, or the Index of Business Improvement, rose to +15 from +8.
  • The Production Index, or output, rebounded sharply to +19, up from -1.
  • The Index of Purchases eased to +8 from +14.

The Institute for Supply Management survey is a monthly survey of business conditions that includes 45 purchasing managers in the greater Grand Rapids area and 25 in Kalamazoo. The respondents are from the region’s major industrial manufacturers, distributors and industrial service organizations. 

It is patterned after a nationwide survey conducted by the Institute for Supply Management. Each month, the respondents are asked to rate eight factors as “same,” “up” or “down.”

More information is available by contacting Brian Long at (269) 870-0428 or by downloading the full report at gvsu.edu.

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