‘Stunning turnaround.’ Here’s where Muskegon’s economy is forecasted to grow
Posted By: mlive on January 27, 2024. For more information, please click here to read the source article.
Muskegon turned the corner economically and is now headed in the right direction to avoid a potential national recession, according to the economic forecast presented to 400 stakeholders on Friday, Jan. 26.
The Muskegon Lakeshore Chamber of Commerce hosted Paul Isely, associate dean and professor of economics at Grand Valley State University, to present his economic forecast for 2024 at the VanDyk Mortgage Convention Center.
The West Michigan region is looking better than the national outlook, Isley said. West Michigan’s strengths in increasing population, strong housing demand and diversified industries will help it weather any downturn and in some cases outperform the rest of the country.
“Muskegon is behaving differently, and it’s going to behave differently over the next five years than the rest of Western Michigan. So we have to be prepared for that and sort of think about where we’re heading,” Isley said.
Here’s a few things Muskegon has going for it, and what it can further capitalize on:
Workforce is younger and more educated than pre-COVID
From 2006 to 2019, Muskegon’s working age population was declining. That started to turn around in 2020 and the years after. This increase is coming from young people moving to Muskegon, rather than an increase in young residents entering the workforce. However, Isley notes this timeline also overlays with the Muskegon Promise’s expanding eligibility.
In 2022, the scholarship program for free tuition changed its GPA requirements from 3.5 to 3.4, adding 625 more eligible students. The following year the requirement lowered to 3.25 grade point average, or to rank within the top 30% of their graduating class. That 2023 expansion added more than 850 eligible students.
“It’s right in line with Muskegon promise, which might be holding some students here in Muskegon for a longer period of time and they would have been otherwise,” Isley said.
Similarly, the data shows the average education of a Muskegon worker is going up faster than the rest of the region.
“That’s also indicative of the fact that that policy change is actually doing some of the stated goals that we’re getting towards to help anchor some young people here and to increase the education of our workforce,” Isley said.
The overall increase brings Muskegon workforce close to the 2009 levels, Isley said.
Muskegon County’s neighbors, Kent and Ottawa, are growing at a rapid pace — they’re leading the state. It’s hard company to keep up with but when zeroing in on just the last three years, Isley said Muskegon’s workforce population grew more than both Kent and Ottawa.
“[That] is a stunning turnaround from 10 years ago,” he said.
Kent and Ottawa are still fierce competitors for jobs, though, Isley said. Nearly 55% of Muskegon’s working population of 20- to 55-year-olds are commuting outside of Muskegon County for work. A third are going to Kent, a third are going to Ottawa and the last third are going elsewhere.
“This tells us that they we have some work to do here with creating job opportunities that are competitive,” Isley said. “Because people aren’t going to travel all the way to Kent or Ottawa county if there’s something here that pays the same.”
To right the course, Isley predicts that more Muskegon employers will increase their pay faster than in other areas. He also considers this a selling point for companies relocating to Muskegon because the county has a young, growing workforce looking for closer opportunities.
A more affordable option to live by the lake
Despite Muskegon’s persistent commuter problem, the hybrid work shift has made the housing market more desirable — and competitive. Isley’s calculation estimates 700 people per year move from Ottawa County to Muskegon County in search of more affordable housing. The median home price for Ottawa County in 2023 was $352,000 compared to Muskegon’s $209,000, according to Redfin data.
Demand is pushing housing prices in Muskegon up, even as sales are trending downward. This is a symptom of the stagnant supply, Isley said.
The city of Muskegon released a housing report that found a shocking deficit in housing at all income levels. The study determined a need for 1,611 additional rental units and 1,313 homes for sale in the next five years. That represents about a 20% increase in overall housing stock.
To start the new year, the city committed to adding homes for ‘working class’ residents on the 36 vacant lots owned by the Muskegon County Land Bank Authority.
Part of the city’s ambitious housing initiative is to use $5 million in American Rescue Plan Act funding to support housing construction and cover differences between sales prices and construction costs. The goal is to sell roughly half of new infill homes to people earning between 80% and 120% of the area’s median income.
Isley’s main takeaway for the audience was that a recession in Muskegon County is unlikely, and that’s because the economy has diversified away from making and selling things to selling experiences and services.
“We’re seeing value added across the greater set of industries, where before you were mostly foundries, medical care, and some other assorted manufacturing,” Isley said. “You’re now getting a broader set of industries. A broader set of industries will make you more resilient.”
Muskegon’s tourism has taken off.
In 2022, the tourism industry had an economic impact of $366.6 million, according to research company Tourism Economics and the Michigan Economic Development Corporation.
The impact of lakeshore events, arts and cultural organizations made up 18.4% of that economic impact. Festivals brought in an estimated $67.6 million in revenues and value to the region in 2022, according to Visit Muskegon, the county’s destination marketing organization.
Muskegon is leaning into its cruise appeal as well. More than 3,000 passengers arrived in Muskegon via the Great Lakes this year, bringing with them almost $1 million in additional revenue for the city.
The $80 million investment in ridding Muskegon Lake of industrial pollution is paying off, and has even more to offer, Isley said.
Adding infrastructure around the lake for public access and zoning ordinances for secondary homes and short-term rentals will continue the momentum, he said. Both have been recent topics at city and county commission meetings.
“I think that’s the low hanging fruit and you’ve been attacking it as a as a city already,” Isley said. “But you need to double down on that. Because if you bring people here for the lake, they’re going to come downtown and you’re downtown is going to grow.”
« Back to Insights