GRAND RAPIDS, Mich. (WOOD) — The greater Grand Rapids economy has slowed down for the third month in a row, a Grand Valley State University researcher says.
Brian Long, the director of supply management research at GVSU’s Seidman College of Business, has been tracking the Grand Rapids-area economy since 1989 with a monthly survey to West Michigan firms and purchasing agents. He said three months in a row of negative growth doesn’t happen often.
Still, he said it’s not necessarily a reason to be alarmed, as the Federal Reserve has worked to create a slowdown in order to curb inflation.
“It is concerning from the standpoint that we can’t anticipate just exactly where we’re going from here. This could be nothing more than a slowdown, i.e. the soft landing that the Federal Reserve has counted for us,” he explained. “To a certain extent, the higher interest rates have caused the economy to slow down, but I tell people that’s exactly what the Fed wanted to happen.”
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A slowdown can be a good thing, he said.
“The problem that it may be slowing too much, that’s not so good,” he said.
The local slowdown is largely connected to the automotive industry, which is not seeing the growth in electric vehicles that industry leaders had hoped for.
In the Marshall area, Ford has reduced the scale of the under-construction BlueOval Battery Park facility in response to EV growth falling short of expectations.
“We’re going through a lot of change,” Tony Reinhart, Ford’s director of state and local government affairs, told the Michigan Strategic Fund board in July. “The rapid transformation of the auto industry is real and continued. We’re going through as much change as we’ve seen since our inception in the industry itself.”
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Tier 1 and Tier 2 suppliers in West Michigan are feeling the impact of the tricky change.
“Some of our local companies have put huge investments into demand that simply is not going to be there,” Long explained. “They thought that this electric automobile thing was going to take off quicker than it did. The fact is there’s a lot of electric cars sitting on dealers’ lots right now, unsold.”
That’s partially because of what’s referred to as a “fashion cycle,” he explained.
“It’s generally been the higher income people that have bought these cars, and a great deal of them that wanted them already have them,” he said. “As a result, here we are with too many goods and not enough buyers.”