1. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH How are Things Going? Thoughts to Albion Jim Robey March 3, 2016 1 W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH

2. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH 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

3. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Regional and Economic Planning Services Data Dissemination & Analysis Economic Impact Studies Economic & Workforce Development Strategy Talent Assessment Urban & Regional Planning 3

4. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Forecasts are too optimistic for 2016? 4 Source: Bureau of Labor Statistics Current Employment Survey, Bureau of Economic Analysis, Philadelphia Federal Reserve Consensus Forecast

5. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH The employment forecast suggests more modest employment growth in the next two years 258,000/ mth 221,000/mth 197,000/mth* 133,000/mth** Source: Bureau of Labor Statistics, *Philadelphia Federal Reserve Consensus Forecast, and **University of Michigan Research Seminar in Quantitative Economics 5

6. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Consumers are confident—as borrowing indicates Source: New York Federal Reserve and Conference Board 6

7. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Real wages for production workers are flat, but may be on the rise 7 Source: Bureau of Labor Statistics Current Employment Survey and Consumer Price Index

8. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH The calendar isn’t calling yet for a recession—if you trust history 2007–present 2001–2007 1981–1990 1991–2000 Source: Bureau of Labor Statistics Current Employment Survey 8

9. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Auto sales are nearly at capacity 9

10. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH National nondurables: growth or no growth? 10 Source: Moody’s Analytics and Upjohn Institute

11. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH National durables: more of the same? 11 Source: Moody’s Analytics and Upjohn Institute

12. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Mixed national business conditions for 2016 Interest rates remain low following the bump by the Fed in December Fuel prices are expected to remain low Sluggish international markets High value of the dollar Labor and skills shortages Commodity prices are low 12

13. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Moving on to Michigan 13

14. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Employment growth in Michigan was solid and spread across many sectors 14 Source: Bureau of Labor Statistics Current Employment Survey

15. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Real wages are down since 2007, but may be rising 15 Source: Bureau of Labor Statistics, Current Employment Survey and Consumer Price Index

16. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Latest University of Michigan employment forecast shows continued growth Employment Forecast 4 th Quarter to 4 th Quarter 2014 67,233 jobs (1.6%) 2015 80,000 jobs (1.9%) 2016* 61,100 jobs (1.4%) 2017* 64,800 jobs (1.5%) 16 Source: University of Michigan Research Seminar on Quantitative Economics

17. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Michigan is following the nation Source: Philadelphia Federal Reserve Consensus Forecast and University of Michigan Research Seminar on Quantitative Economics 17

18. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Next Up, Calhoun County 18

19. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Employment growth in the region has been comparable to the state since the end of the Great Recession 19 Source: Bureau of Labor Statistics Current Employment Statistics and Upjohn Institute

20. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Service-providing employment is pacing statewide growth patterns 20 Source: Bureau of Labor Statistics Current Employment Statistics and Upjohn Institute

21. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Manufacturing employment has outperformed national manufacturing growth 21 Source: Bureau of Labor Statistics Current Employment Statistics and Upjohn Institute

22. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH The local labor market is similar to the state and the nation 22 Source: Bureau of Labor Statistics Local Area Unemployment Statistics

23. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Labor markets are tight: Calhoun County is at 4.9% along with the U.S. at 4.9% 23 Source: Bureau of Labor Statistics Local Area Unemployment Statistics

24. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH The national LFPR was 62.6 in 2015; Calhoun County was a little lower at 60.5 24 Source: Bureau of Labor Statistics Local Area Unemployment Statistics and Upjohn Institute

25. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Real wages have been relatively flat until 2015 25 Source: Bureau of Labor Statistics Quarterly Census of Employment and Wages *2015 data through second quarter only

26. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Calhoun County residents are paid relatively well 26 Source: Bureau of Labor Statistics Quarterly Census of Employment and Wages and Upjohn Institute

27. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Albion has avoided the unfortunate trend of less educated younger people 27 Source: US Census American Community Survey 2010-2014

28. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Battle Creek MSA 2016–2017 Forecast 28 Source: Upjohn Institute

29. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Local Conditions Auto sales are expected to remain solid through 2016 and 2017 Other manufacturing sectors, including furniture and aerospace, are flat Labor and skills shortages Commodity prices are low Low unemployment rate Availability of commercial/industrial real estate Lack of investment in residential capital 29

30. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Recent news impacting outlook: a mixed bag February Consumer Confidence was down to the lowest point since July: 92 Conference Board Leading Indicators -.2% Moody’s Risk of Recession +5% to 21% January CPI Came in at 0% January Industrial Production Up.9% December Revised Down.3% to -.7% SAAR Auto Sales for February: 17.5 Million Units Construction Spending Up 1.5% (Consensus.4%) – Led by Public Sector @ 4.5% with Private at.5% 30

31. W.E. UPJOHN INSTITUTE FOR EMPLOYMENT RESEARCH Questions and Comments? Upjohn Institute: 269-343-5541 Jim Robey – Director of Regional Economic Planning Services – jim.robey@upjohn.org jim.robey@upjohn.org Brian Pittelko – Regional Analyst – pittelko@upjohn.org pittelko@upjohn.org 31