The significant decline in gasoline prices and gains in house price have boosted consumer confidence all over the nation, especially in Central West Michigan, where the economy is tightly connected with auto industry. Sales of SUVs and light trucks have accelerated in the past few months as fuel prices dropped, helping manufacturing industries in Central West Michigan. According to the Bureau of Economic Analysis, growth in manufacturing in the third quarter exceeded growth in any other major economic sector in Michigan. Demand for office furniture is expected to stay strong throughout 2015, pushing furniture production to its highest since 2008. Increased furniture production, basically from middle-market furniture producers, along with strong job growth, lower gasoline prices and increased consumer confidence are expected to help strengthen the Michigan economy.
Moderately strong job growth has brought the CWM unemployment rate to 4.9 percent in the fourth quarter of 2014. We expect the regional unemployment rate to continue to trend lower through 2015 and 2016, putting upward pressure on wage rates, especially for skilled positions.
Housing markets in the Grand Rapids area remain tight. Both rental rates and purchase prices are increasing. However, house construction has remained modest. Limited in-migration is contributing to below-average population growth, constraining demand for housing. In February, Trulia listed an average price per square foot of home as $134, an increase of 6.3 percent from that same period last year. Current low inventories and harsh weather has constrained the housing market over the winter. Ongoing economic growth along with strengthening credit quality will support housing markets in 2015 and further in 2016. We expect homeowners to increase their wealth as prices rise in a low interest rate environment.
Click here for the complete Central West Michigan Regional Economic Update: CentralWestMI2014_Q4.