2021 Economic Outlook: Cadillac/Wexford County - A presentation to Cadillac Area Chamber of Commerce
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2021 Economic Outlook: Cadillac/Wexford County A presentation to Cadillac Area Chamber of Commerce Jim Robey, PhD W.E. Upjohn Institute for Employment Research February 16, 2021
W.E. Upjohn Institute for Employment Research The Institute is an activity of the W.E. Upjohn Unemployment Trustee Corporation, which was established in 1932 to administer a fund set aside by Dr. W.E. Upjohn, founder of the Upjohn Company. MISSION: The W.E. Upjohn Institute for Employment Research is a private, nonprofit, nonpartisan, independent research organization devoted to investigating the causes and effects of unemployment, to identifying feasible methods of insuring against unemployment, and to devising ways and means of alleviating the distress and hardship caused by unemployment. 2/19/2021 Source: REMI, RSQE, and Upjohn Institute 2
REMI Forecasts National Economy
The COVID-19 pandemic has hit the economy similarly to
the Spanish Flu of 1918 4
Manufacturing Employment in Selected States in 2020
105 (not seasonally adjusted)
Manufacturing
Employment during 100
Spanish Flu
Pandemic Index (February 2020)
95 WI: -7%
Wisconsin: - 7%
Ohio: -11%
90
New York: -15%
OH: -13%
85
Velde, F. R. (2020). What happened
to the US economy during the 1918 NY: -18%
influenza pandemic? A view through
high-frequency data. 80
February March April May June July August September October November December
United States New York Wisconsin Ohio
Source: Bureau of Labor Statistics & Upjohn Institute –
2/19/2021 Current as of December 2020
Employment is higher than December 2007, but not fully
recovered
Nonfarm Employment Index
115
110
Index (Dec 2007 = 100)
105
100
95
90
85
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2019 2020 2021
United States
Source: Bureau of Labor Statistics Current Employment
5
Survey & Upjohn Institute – Current as of February 2021
GDP growth is projected to remain solid, although
employment growth is forecast to be slowing
Forecast
40
Gross Domestic Product and Employment Change 20,000
Employment Change (000s)
30 15,000
GDP Change (% chg)
20 10,000
10 5,000
0 0
-10 -5,000
-20 -10,000
-30 -15,000
-40 -20,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
GDP Change (L) GDP Annual Avg. (L) Employment Change (R)
Source: Bureau of Labor Statistics Current Employment Survey, Bureau of
2/19/2021 Economic Analysis, & Federal Reserve Bank of Philadelphia – Survey of 6
Professional Forecasters – Current as of February 2020Moody’s predictions of a recession are trending downward:
28% in December
Likelihood of Being in a Recession in the Next Six Months
100
90
Likelihood of Recession (%)
80
70
60
50
40
30
20
10
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Moody’s Analytics – Current as of February 2020 7National PMI stood at 58.7 in February, indicating that the
manufacturing sector is expanding
Purchasing Managers Index - National
70
65
60
55
Index
50
45 Readings below
50 indicate sector
is contracting
40
35
30
Source: Institute for Supply Management –
2/19/2021 Current as of February 2021
8The stock market has reacted to various events this year,
and the recent ride has been surprisingly good
Dow Jones Industrial Average*
11/09/2020
33,000 3/13 Pfizer Covid-
COVID-19 7/29 19 vaccine 17.0
31,000 Covid-19 announced
Unemployment Rate %
declared
national deaths
29,000 health surpass 15.0
1/20/2021
emergency 150,000
Joe Biden
27,000 01/29
USMCA inaugurated 13.0
9/22/2020 11/07/2020 as President
signed into
25,000 law
Covid-19 AP calls of the U.S. 11.0
5/27 deaths winner of
23,000 Covid-19 surpass Presidential
deaths 200,000 election 9.0
21,000 3/27 surpass
CARES Act 100,000 7.0
19,000 signed into
law
17,000 5.0
15,000 3.0
January 2020 February 2021
Source: Yahoo Finance and Bureau of Labor Statistics –
Source: Yahoo Finance & Bureau of Labor Statistics 9
Current as of February 2021Consumer confidence and sentiment are bouncing around
after falling precipitously between February and April
Consumer Confidence
140 140
120 120
Index of Consumer Sentiment
Index of Consumer Confidence
100 100
Index: 1966 = 100
Index: 1985 = 100
80 80
60 60
40 40
20 20
0 0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Recessions Index of Consumer Confidence (CB) Index of Consumer Sentiment (U of M)
Source: Conference Board and University of Michigan –
2/19/2021 Current as of January 2021
10University of Michigan/RSQE November* national forecast:
Note that these estimates are annualized
2020 2 0 21 2022
2 01 9
( For ecast) ( For ecast) ( For ecast)
GDP 2.2% -3.6% 4.2% 3.0%
Employment 1.3% -5.7% 2.7% 2.6%
Light Vehicle Sales
17.0 14.5 16.3 16.7
(Millions)
Unemployment
3.7% 8.1% 5.9% 5.3%
Rate
Housing Starts
1.30 1.34 1.39 1.42
(Millions)
CPI/Inflation 1.8% 1.2% 2.0% 2.1%
2/19/2021 - *Current as of November 2020 11The number of UI filings have stabilized
Weekly Initial Claim Filings for Unemployment Insurance are Slowing but Remain
at Historically High Levels
Number 8
of Claims
in millions 7
(seasonally
adjusted) 6
5
4
3
2
1
0
Jan-20 Feb-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21
Source: Unemployment Insurance Weekly Claims Data, U.S. Department of
12
Labor and Upjohn Institute – Current as of February 2021The number of traditional continuing claims are trending
downward
Weekly continuing claims for unemployment insurance
Number 30
of Claims
in millions 25
(seasonally
adjusted)
20
15
10
5
0
Jan-20 Feb-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21
Source: Unemployment Insurance Weekly Claims Data, U.S.
Department of Labor and Upjohn Institute – Current as of February 13
2021REMI Forecasts National Economic Forecast
Methodology
• Upjohn uses a REMI model (www.REMI.com)
• To estimate economic impacts from projects and events
• Forecast national and regional changes in trends
• As new forecasts were produced the latest REMI model was updated
• National forecast is updated
• Regional forecasts are updated
• Forecasts come from:
• Research Seminar in Quantitative Economics at U of M
• Congressional Budget Office (CBO)
15National forecast for total employment
230,000
220,000
Total Employment
210,000
(in thousands)
200,000
190,000
180,000
170,000
2019 2021 2023 2025 2027 2029 2031 2033 2035
Pre-COVID-19 March May August November
Source: REMI & Upjohn Institute – Current as of November
16
2020Industry recovery forecast
Projected Recovery of Industry Sectors Nationally by 2025
Health Care and Social Assistance
Educational Services
Finance and Insurance
Arts, Entertainment, and Recreation
Fully recovered or
Professional, Scientific, and Technical Services more
Information
Administrative and Support and Waste Management and…
Real Estate and Rental and Leasing Not fully
Accommodation and Food Services
Transportation and Warehousing
recovered
Utilities
Management of Companies and Enterprises
Manufacturing
Agriculture, Forestry, Fishing and Hunting
Wholesale Trade
Construction
Public Administration
Retail Trade Full Recovery
Mining, Quarrying, and Oil and Gas Extraction
Other Services
80 85 90 95 100 105 110
Source: REMI & Upjohn Institute – Current as of November
17
2020National forecast for goods producing employment
28,000
27,000
Total Employment
(in thousands)
26,000
25,000
24,000
23,000
2019 2021 2023 2025 2027 2029 2031 2033 2035
Pre-COVID-19 March May August November
Source: REMI & Upjohn Institute – Current as of November
18
2020National forecast for business service sector*
employment
78,000
75,000
Total Employment
(in thousands)
72,000
69,000
66,000
63,000
60,000
2019 2021 2023 2025 2027 2029 2031 2033 2035
Pre-COVID-19 March May August November
*Includes: Wholesale Trade; Transportation & Warehousing; Information, Finance, & Real Estate; Professional, Scientific, & Business Services;
Management of Companies & Enterprises; Administrative, Support, Waste Management & Remediation Services
Source: REMI & Upjohn Institute – Current as of November
19
2020National forecast for personal service sector*
employment
90,000
85,000
Total Employment
(in thousands)
80,000
75,000
70,000
65,000
2019 2021 2023 2025 2027 2029 2031 2033 2035
Pre-COVID-19 March May August November
*Includes: Retail Trade, Education & Health Services, Leisure & Hospitality, Other Services (excluding Public Administration).
Source: REMI & Upjohn Institute – Current as of November
20
2020National forecast for total output
70,000
65,000
(billions of current dollars)
60,000
Total Output
55,000
50,000
45,000
40,000
35,000
2019 2021 2023 2025 2027 2029 2031 2033 2035
Pre-COVID-19 March May August November
Source: REMI & Upjohn Institute – Current as of November
21
2020Michigan Economy
University of Michigan RSQE current* state forecast
2020 2021
2019
(Forecast) (Forecast)
Employment Change
36.7 (+.08%) -352.1 (-7.4%) 176.6 (+4.0%)
(thousands)
Manufacturing
Employment Change -2.1 (-.03%) -64.4 (-10.3%) 31.5 (+5.6)
(thousands)
Unemployment Rate 4.1% 10.1% 7.1%
Labor Force
61.8% 61.0% 61.2%
Participation Rate
2/19/2021 *Current as of November 2020 23Light vehicle sales are doing relatively well, but will supply
chain issues and affordability affect supply and demand?
Annualized Rate of U.S. Light Vehicle Sales (In Millions)
24
Annual Rate of Sales (in 000,000s)
22
20
18
16
14 16.8 (2000 to 2007 Average) 16.7 (2013 to 2019 Average)
12
10
8
6
4
2
0
2/19/2021 Source: Moody’s Analytics – Current as of February 2021 24Class 8 Truck Orders reach highest level since 2019
Class 8 Truck Orders
60
Annual Rate of Sales (in 000s)
50
40
30
20
10
0
Monthly Sales Annual Average
2/19/2021 Source: Moody’s ACT Research – Current as of January 2021 25Michigan unemployment rate
• In December 2020, Michigan’s
unemployment rate was at 7.5%
and the United States was at 6.7%.
Source: Moody’s ACT Research – Current as of February
2/19/2021 2021
26Cadillac area unemployment rate
• In December 2020, Wexford
County’s unemployment rate was at
5.4% and Michigan was at 7.5%.
Source: Moody’s ACT Research – Current as of February
2/19/2021 2021
27Michigan labor force participation rate
• In December 2020, Michigan’s
labor force participation rate was at
59.9% and the United States was at
61.5%.
Source: Moody’s ACT Research – Current as of February
2/19/2021 2021
28Cadillac area labor force participation rate
• In December 2020, Wexford
County’s labor force participation
rate was at 54.7% and Michigan’s
was 59.9%.
Source: Moody’s ACT Research – Current as of February
2/19/2021 2021
29Cadillac area internet coverage
• Internet Services in Wexford and
Missaukee Counties max out at 100
Mbps Download; 10 Mbps Upload.
• While 1 Gbps Download speeds are
sparse across Michigan, Wexford
and Missaukee Counties lack any
such services.
• All cities and villages in Wexford and
Missaukee Counties have at least
partial 100 Mbps Download speeds,
except for the Village of Harrietta.
Source: Moody’s ACT Research – Current as of February
2/19/2021 2021
30Current Conditions Cadillac/Wexford County Economy
Based on the latest data, the current unemployment
rate for Wexford County was 5.4% in December
Unemployment Rate for Wexford County
35
30
Percent of Labor Force (%)
25
20
15
10
5
0
Source: Quarterly Census of Employment and Wages, Bureau
32
of Labor Statistics – Current as of February 2021Wexford County has started to recover jobs that were
displaced in the COVID-19 Recession
Total Employment Index
120
110
Index (Dec 2007 = 100)
100
90
80
70
60
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Note: Latest data are from June 2020 Recessions Wexford County Michigan United States
Source: Quarterly Census of Employment and Wages, Bureau
33
of Labor Statistics – Current as of February 2021Manufacturing employment took a large hit during the
lockdowns but has rebounded faster than the nation or
state
Manufacturing Employment Index
120
110
Index (Dec 2007 = 100)
100
90
80
70
60
50
40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Note: Latest data are from June 2020 Recessions Wexford County Michigan United States
Source: Quarterly Census of Employment and Wages, Bureau
34
of Labor Statistics – Current as of February 2021The service sector employment rebound is slightly faster
than the state
Service Providing Employment Index
120
110
Index (Dec 2007 = 100)
100
90
80
70
60
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Note: Latest data are from June 2020 Recessions Calhoun County Michigan United States
Source: Quarterly Census of Employment and Wages, Bureau
35
of Labor Statistics – Current as of February 2021Employment recovery
Percent of Jobs Regained* by December 2020 Following Employment
Declines Beginning in March in West Michigan by Major Sector
Finance and Insurance 175%
Transportation, Warehousing, and Utilities 157%
Mining, Logging, and Construction 123%
Retail Trade 93%
Health Care and Social Assistance 84%
Professional, Scientific, and Technical Services 79%
Other Services 77%
Total Nonfarm 64%
Manufacturing 61%
Leisure & Hospitality 51% Full Recovery
Wholesale Trade 50%
Educational Services 36%
Government 8%
Information 0%
0% 25% 50% 75% 100% 125% 150% 175% 200% 225%
Percent of jobs regained by December 2020
*Data not seasonally adjusted
Source: Bureau of Labor Statistics – Current as of December
36
2020Job Postings Cadillac/Wexford County Job Postings
Job postings in West Michigan in December 2020 were
about where they were in December of 2019
Job Postings in West Michigan Change in Trend from a Year Earlier
50%
40%
30%
Restrictions eased,
Percentage Change
reopening begins
20% Seasonal holiday
hiring
10%
Lockdown begins
0%
-10%
-20%
-30%
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21
Source: Burning Glass & Upjohn Institute – Current as of
38
January 2021Total job postings in Wexford County
350
300
250
Total Job Postings
200
150
100
50
0
Job Postings 12-month average
2/19/2021 Source: Burning Glass - Current as of February 2021 39Total job postings for health care and social assistance in
Wexford County
80
70
60
Total Job Postings
50
40
30
20
10
0
Job Postings 12-month average
2/19/2021 Source: Burning Glass - Current as of February 2021 40Total job postings for manufacturing in Wexford County
40
35
30
Total Job Postings
25
20
15
10
5
0
Job Postings 12-month average
2/19/2021 Source: Burning Glass - Current as of February 2021 41Total job postings for retail trade in Wexford County
60
50
Total Job Postings
40
30
20
10
0
Job Postings 12-month average
2/19/2021 Source: Burning Glass - Current as of February 2021 42Total job postings for accommodation and food services
in Wexford County
30
Total Job Postings
20
10
0
Job Postings 12-month average
2/19/2021 Source: Burning Glass - Current as of February 2021 43Total job postings for transportation and warehousing in
Wexford County
40
35
30
Total Job Postings
25
20
15
10
5
0
Job Postings 12-month average
2/19/2021 Source: Burning Glass - Current as of February 2021 44REMI Forecasts Northwest Michigan Works! Forecast
Forecast for total employment for Northwest Michigan
Works!
945
925
905
Total Employment
(in thousands)
885
865
845
825
805
785
2019 2021 2023 2025 2027 2029 2031 2033 2035
Pre-COVID-19 March May August November
Source: REMI & Upjohn Institute – Current as of November
46
2020Industry recovery forecast
Projected Recovery of Industry Sectors in NW Michigan by 2025
Construction
Mining, Quarrying, and Oil and Gas Extraction
Manufacturing
Professional, Scientific, and Technical Services
Fully recovered or
Educational Services more
Management of Companies and Enterprises
Finance and Insurance
Real Estate and Rental and Leasing Not fully
Utilities
Administrative and Support and Waste Management and…
recovered
Accommodation and Food Services
Transportation and Warehousing
Information
Agriculture, Forestry, Fishing and Hunting
Wholesale Trade
Health Care and Social Assistance
Arts, Entertainment, and Recreation
Other Services
Full Recovery
Public Administration
Retail Trade
92 94 96 98 100 102 104 106
Source: REMI & Upjohn Institute - Current as of November
47
2020Forecast for goods producing employment for Northwest
Michigan Works!
215
210
205
200
(in thousands)
195
Jobs
190
185
180
175
170
2019 2021 2023 2025 2027 2029 2031 2033 2035
Pre-COVID-19 March May August November
Source: REMI & Upjohn Institute – Current as of November
48
2020Forecast for business services* employment for
Northwest Michigan Works!
310
305
300
295
290
(in thousands)
285
Jobs
280
275
270
265
260
255
250
2019 2021 2023 2025 2027 2029 2031 2033 2035
Pre-COVID-19 March May August November
*Includes: Wholesale Trade; Transportation & Warehousing; Information, Finance, & Real Estate; Professional, Scientific, & Business Services;
Management of Companies & Enterprises; Administrative, Support, Waste Management & Remediation Services
Source: REMI & Upjohn Institute – Current as of November
49
2020Forecast for personal services employment for Northwest
Michigan Works!
360
350
340
(in thousands)
330
Jobs
320
310
300
290
280
2019 2021 2023 2025 2027 2029 2031 2033 2035
Pre-COVID-19 March May August November
*Includes: Retail Trade, Education & Health Services, Leisure & Hospitality, Other Services (excluding Public Administration).
Source: REMI & Upjohn Institute – Current as of November
50
2020Forecast for total output for Northwest Michigan Works!
285
265
(in billions of current dollars)
245
Total Output
225
205
185
165
145
2019 2021 2023 2025 2027 2029 2031 2033 2035
Pre-COVID-19 March May August November
Source: REMI & Upjohn Institute – Current as of November
51
2020Moving Forward
Considerations for the Future of the Economy: Macro
• The shape of the recovery curve?
• Will temporary closures become permanent?
• Supply versus demand?
• SME’s
• What will be the impact of:
• The new strain?
• Vaccines?
• What will be the impact from the new administration?
• Tax policy
• Trade policy
• Stimulus policy
53Considerations for the Future of the Economy
• Is reshoring real?
• Supply chain issues
• Available buildings and sites
• How will technology impact employment?
• When and will people go back to work?
• What will the new Administration do about UI benefits?
• Fear of contracting COVID-19?
• Barriers, notably childcare and school openings, in returning?
• Other state and regional administrative decisions
• Openings/closings
• Vaccine availability and distribution
54Questions?
• Jim Robey, PhD
• Director, Regional and Economic Planning Services
• Email: jrobey@upjohn.org
• Phone: 269-343-5541
• Twitter: @JimRobey
• Keep up to date with Regional by signing up for our Regional email list.
Send an email to boyle@upjohn.org to register.
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