MCC head declares ‘new normal’ in Macomb County economy
Posted January 22, 2015
MACOMB COUNTY — Dr. Jim Jacobs believes that the status quo of Macomb County’s economy has changed.
For Jacobs, the president of Macomb Community College and a longtime local economist, this theme is at the heart of the county’s outlook during the year ahead. On Jan. 16, he presented his annual Macomb County Economic Forecast before a crowd of hundreds of leaders at the local, county, state and federal levels. The event, hosted by the Chamber Alliance of Macomb County at Andiamo Italia in Warren, gave Jacobs a chance to sum up the progress that has been made since the Great Recession struck and the challenges that still remain.
He described in detail the “new normal” that Macomb County has settled into coming out of the recession. This has resulted in lower unemployment, increased home values and a rise in disposable income among residents. Still, Jacobs stressed the need for county officials to continue to collaborate with regional partners and explore more diverse economic opportunities.
“What does the economic future of Macomb County hold?” he asked. “While it’s uncertain, it’s not without potential. Given the vision, the leadership and the ability to (share) resources, the future can be exceedingly bright past 2015. Indeed, Macomb County can play a role in the new form of suburban development, which will challenge all of us to think way beyond our usual framework.”
Jacobs stated that Macomb County has been “moving up slowly” over the last five years, with a U-shaped economic recovery rather than the preferred V-shaped gains. This means that while the county economy has grown steadily since 2010, exceeding national growth patterns each year, it still hasn’t returned to the same level as boom years such as 1999.
“It’s not hard to predict economic growth on the national level,” he said, “and most of those developments will continue to fuel recovery for Macomb County, the Detroit metropolitan area and the state of Michigan. … However, while it’s important to recognize these positive developments, the recovery has not brought our economy back to pre-2008 levels. It appears that the expansion of the American domestic auto industry — the principal local, regional and state driver of our economy — might begin to reach its limit in sales and market penetration by the end of 2015.”
Jacobs cited some positive economic developments across Macomb County that occurred over the past year, including, in Roseville, the ongoing renovations at Macomb Mall; in Warren, General Motors’ purchase of the former Campbell Ewald building, Chrysler’s continued expansion of its manufacturing operations, and the opening of Wayne State University’s new Advanced Technology Education Center; and in Sterling Heights, the development of the Macomb-OU (Oakland University) Incubator and the opening of the new Chaldean Community Foundation facility.
Jacobs provided employment statistics showing that over the last five years, the number of private-sector construction, manufacturing, wholesale trade, retail trade, information technology, administrative support, health care and social assistance jobs in Macomb County have increased, especially in the first two categories. Still, while the county’s unemployment rate decreased from 12.4 percent in November 2010 to just 6.8 percent in November 2014, the number of residents who are participating in the labor force also declined slightly during that same time span.
“That’s an important and troubling sign for our society,” Jacobs said. “Where is the disconnect? Some of that I think has to do with the large number of older workers who were laid off during the recession … who still have not been absorbed (back into the labor force). This question of the mature worker is a particular problem in aging communities like Macomb County.”
The county’s real estate market is also on the rise, Jacobs said, with substantial increases in the number of residential home sales, median home values and new building permits, as well as a significant drop in the number of foreclosures. While there were only 1,002 homes sold in 2009, that quantity rose to 2,339 last year. Most Macomb County communities will also see their property values continue to increase in 2015, with Sterling Heights leading the way at an estimated 15.29 percent. Meanwhile, there were 1,680 residential building permits filed in 2014 — including 445 in Macomb Township alone — compared to just 313 five years earlier.
Still, Jacobs said, “the bad news is that many of those new homes are concentrated in the area between Hall Road and 26 Mile (Road), which creates a kind of housing bubble that could result in overvalued properties.”
In addition, Jacobs contended that median household income “still has a long way to go” to return to its prerecession levels. Statistics show that Macomb County’s numbers declined by 26.2 percent from 1999 to 2013, or from $71,797 to $52,978.
“Part of that has to do with significant income changes over the last 20 years, which resulted in large numbers of lower-income people moving into Macomb County,” Jacobs said. “But the number of people who are on any kind of public assistance has softened in the last few years.”
Looking forward, Jacobs believes that some key economic issues for metro Detroit will be the progress made by the new Great Lakes Water Authority and the Regional Transit Authority. Locally, he was concerned with addressing the needs of the large number of immigrants and refugees moving into Macomb County, as well as developing stronger collaborations with post-bankruptcy Detroit.
“The positive image of Macomb County has grown on many different levels,” Jacobs said. “We now play a role in every part of metropolitan life, which I think will really help develop success for the county. … Growth (in Detroit) cannot be achieved at the suburbs’ expense — it has to be achieved in conjunction with the suburbs in the areas where we will see mutual gains. … It’s very comforting on many different levels to see lots of different parts of Macomb County playing a role in that effort.”
Jacobs referenced several “wild cards” that the county will have to face as economic recovery slows down near the end of 2015, including the degree to which the U.S. Congress is able to work together and compromise; continued international instability, especially in Europe; the strength of the U.S. dollar, which should continue to keep inflation low; the effectiveness of the state’s new road funding proposal; ongoing labor negotiations at the Detroit auto companies; and the resolution of issues with the regional water authority.
“The bankruptcy threat (in Detroit) is over, and I think we’re stronger and leaner as a region,” he said. “But we also have to recognize reality, and that means we don’t go back to the past. We look forward. We can do good things, but we have to do them in different ways, which means that no one institution, no one city, no one school, no one company can do it alone. We need to work with a vision that brings us together, and we need a civic culture — a culture that understands that the role of government can promote risk taking and creativity and growth.”
Jacobs believes that Macomb County officials can learn from the “grand bargain” that helped Detroit address its bankruptcy issues. He called that effort a “very, very impressive” example of how new models of regional collaboration should work.
“A lot of the grand bargain was very much (from the) top down,” Jacobs said. “It was organized by a very small number of people who really kept that vision. But we have the ability to organize grand bargains from the bottom up (in Macomb County). We have the possibility of doing that in a way that promotes the input of citizens and the input of the people in this room. If we take that path, I think our future is going to be very bright past 2015.”
Dave Flynn, chair of the Macomb County Board of Commissioners, was in attendance at the event and agreed with many of Jacobs’ points. Still, the Sterling Heights democrat feels that in order to truly achieve a “new normal” in Macomb County, officials need to more effectively provide services to residents in specific groups, including the rising number of seniors, refugees and military veterans.
“The new normal in Macomb County reflects a changing in our demographics, in our mindset and in how we need to work together for shared services between communities,” he said. “When you look at our aging population, seniors will increase by 15 percent over the next five years. Out of all the refugees that come to the state of Michigan, Macomb County receives 40 percent of them. This means that the county as a service provider is going to have to figure out how we can deliver services in a more targeted fashion to the consumer, as opposed to how we’ve been delivering them in the past.”
Flynn would also like to see county officials continue to focus on developing regional mass transit, stabilizing water/sewer rates and increasing middle-class wages, as well as reaching beyond their borders to seek new economic opportunities in places like Europe, Asia and South America.
“The economic development leaders of this county … need to look not only throughout the region, but across the nation and overseas, to find emerging markets and try to bring some of those jobs back to Macomb County,” he said. “Per capita, you could argue that we have more engineering and research development skills than anywhere else in the world. We need to use that to our advantage.”
For County Executive Mark Hackel, the “new normal” means that Macomb County can diversify and expand its focus while still holding firmly to its roots in the automotive, defense and manufacturing industries. He would like to see the county do a better job of using the resources it already has to embrace new industries like information technology and cyber security.
“There are things that we’ve always been … but we never really got out from underneath that and started looking to the future,” Hackel said. “Where are we heading now? … We can be an area for this new research, engineering and design (work) because we already are. There is a tremendous amount of talent here that can attract more investment from people who want to be close to that talent. ... The question becomes, ‘How do we get people to recognize the significance of that (talent) so it doesn’t go someplace else?’ We can be the hub, and we already have the nucleus right here.”
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