A new initiative from Fifth Third Bank will offer local economic data for clients, employers, and business and political leaders to use to better understand local trends as they plan for the future.
The Empowering American Cities program is a collaboration between Cincinnati, Ohio-based Fifth Third Bank and the Kenan Institute of Private Enterprise at the University of North Carolina at Chapel Hill. It will offer insights on the local economy of 150 mid-sized markets across the U.S., with data including micro-economic outlooks, growth characteristics, local workforce concentrations and comparisons to other markets.
“The idea is that we want to support the communities where we bank in new ways and particularly the middle-market businesses that are so important to those communities, by giving them economic insight that’s tied not just to the national economy,” said Jeff Korzenik, chief economist at Fifth Third Bank.
“The economy of Western Michigan has something to do with the national economy, but it also has significant variations away from it, and our goal is to give tools that the businesses we bank can use to be more effective, but also tools for the communities,” Korzenik said. “More fundamentally, it gives them tools and a lens by which they can view growth and investment decisions in the local market.”
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Local dashboards created by Empowering American Cities use Kenan Institute research. At a minimum, the data can affirm whether a region’s economy and economic development strategies are on the right track and hold value “in educating people on how to think about growth,” he said.
“Regional economic development authorities can also find value in this database,” Korzenik said. “Through understanding to the degree they’re competing with other cities and metropolitan areas, they can understand who the competition is.”
The initial micro-outlook for the West Michigan extended metropolitan area (EMA) projects “modest growth” of 0.4% in economic activity in 2024, which aligns with Fifth Third’s expectation for slower GDP growth nationally this year.
“The U.S. economy’s projected slowdown in 2024 poses challenges for West Michigan’s large manufacturing base, yet the EMA’s commitments to advanced technologies and skilled labor development are foundational for long-term economic health,” according to the outlook.
Micro-outlooks from Fifth Third and the Kenan Institute project economic activity in the Lansing area to grow 0.4% this year, while the Kalamazoo market is expected to expand 0.3%.
The manufacturing sector accounts for about 20% of West Michigan’s workforce, and 23% of the local GDP. Those rates are more than twice the national averages and the largest among the top 50 markets analyzed in the Empowering American Cities initiative. The large manufacturing presence makes West Michigan “especially vulnerable to the sector’s expected slowdown in 2024,” Fifth Third economists wrote.
The micro-outlook for West Michigan also notes that “attracting, training and retaining high-skilled workers is a perennial challenge,” although “public-private coalitions are leveraging West Michigan’s excellent educational resources for training and upskilling workers while highlighting the high quality of life that the EMA offers for young families looking to settle there,” according to an economic summary for the region.
Learning from the data
The greater Grand Rapids area has “opportunities for investment in the information technologies that complement and support West Michigan’s advancing manufacturing and health care industries, which could have a multiplier effect, bolstering productivity and enhancing the EMA’s growth engine,” according to the regional micro-outlook.
The Right Place Inc., the local economic development organization, has prioritized growing the local information technology sector and workforce through a 10-year strategy it launched in 2022.
Fifth Third’s report has the information technology sector accounting for 1% of the region’s workforce and 2% of GDP, both of which are below the national averages of 2% and 5%, respectively.
Tom Welch, Fifth Third’s regional president in West Michigan, hopes that employers, public officials, business leaders, and economic developers can use the data from the Empowering American Cities program to better understand the dynamics of the local economy.
“Everyone can benefit from this information,” Welch told Crain’s Grand Rapids Business. “There’s just as much relevance in this for a business owner as there is for a community leader or a nonprofit leader. Anyone who wants to see the community move to a place of strength and stability can learn from this data.”
As an example, Welch points to the productivity data being valuable for workforce development officials when it comes time to identify gaps and build new training program.
Fifth Third’s micro-outlook also notes that the finance, real estate and information technology sectors that are the nation’s most productive collectively “account for smaller share of West Michigan’s employment and output relative to national averages, meaning that these sectors should be targeted for growth,” according to the economic summary.
The finance and real estate sectors account for 5% of West Michigan’s employment and 19% of GDP. That compares with slightly higher national averages of 6% and 21%, respectively.
Understanding where growth originates
In the Empowering American Cities project, Fifth Third wants to fill a data gap that may exist for mid-market companies and communities, Korzenik said. Many large corporations tend to have their own operations that do economic forecasting, he said.
“But a lot of middle market companies, even significantly large middle-market companies, don’t have those resources. This is a tool for them to use in that way,” Korzenik said. “For civic leaders, whether business leaders or politicians, this gives it a useful structure for understanding where growth comes from and how to maximize growth potential.
“One of the things that’s happened in the United States, particularly this century since 2000, has been a growing differential between the performance of the national economy and the economies of many of the medium-sized cities that are so important to us.”
Future white papers that Fifth Third and the Kenan Institute intend to issue as part of the Empowering American Cities initiative will examine issues such as the importance of good airports, higher education, and the presence of corporate headquarters to a region’s economy.
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