To borrow a line from the late David Bowie, it’s time for the West Michigan business community “to turn and face the strange” that’s ahead in 2019.
Where to begin?
In Washington, D.C., the U.S. House will swap leadership on the heels of a historic 40-seat takeover by the Democrats. It remains to be seen how exactly President Trump will work with a divided government on important issues like health care, infrastructure and terrorism, particularly if he keeps calling for the border wall he promised to get Mexico to fund.
In the new year, the automotive supply chain and agribusiness sectors will be closely watching that new Congress, which will consider ratifying the United States Mexico Canada Agreement. Both industries remain hopeful for a quick approval for NAFTA 2.0, which they say will be key for their long-term sustainability.
As well, the Federal Reserve has raised interest rates to their highest point in a decade, with promises to keep going higher in the new year. All of that adds to the cost of capital, even if most executives say a quarter-point here and there won’t break good deals or cause pain for well-run companies.
Closer to home, every statewide office in Michigan turned over this year and flipped parties. For the first time in eight years, a Democrat will occupy the office of Governor, Attorney General, and Secretary of State, and members of the party made gains in each chamber of the state Legislature.
Even so, don’t expect incoming Gov. Gretchen Whitmer to flip over the table in an attempt to undo Michigan’s economic progress under her predecessor, Rick Snyder.
“[I]n the executive office, I’ve got the authority to rename, to change, to reorganize state government, and there will be some of that,” Whitmer told MiBiz in an exclusive interview. “I don’t think that there’ll be anything that is so dramatic it turns everything upside down, but we are going to make some changes to make government make more sense for people.”
That kind of sensible talk in Lansing also would be welcome in Washington, D.C., where the current political environment may well pose the biggest threat to our economy over the short term. More than four in 10 Americans (43 percent) agree with that notion, according to Bankrate.com’s latest Financial Security Index. It’s worth noting that the next highest threats among those surveyed are terrorism (9 percent), rising interest rates (8 percent) and a decline in the stock market (7 percent).
But before we all whip ourselves into a frenzy over the changes and uncertainty, it’s important to reflect on the message Upjohn Institute economist Jim Robey delivered as part of The Right Place Inc.’s annual economic outlook.
Robey acknowledges the economic headwinds with tariffs, trade, workforce and talent, and wages, among others. But he cites factors including low unemployment rates, labor force participation, the cost of capital and GDP growth as signs that the U.S. economic expansion still has some legs.
“It’s really important to keep to the fundamentals. When people say ‘there’s a recession 12 months out,’ I don’t know anyone who thinks that,” he said, cautioning executives not to talk themselves into a recession. “Now, will we have a recession sometime? Of course we will. There’s a cycle to everything. But it isn’t, at least at this point, even on the horizon.”
Here’s hoping he’s right.
Brian Edwards, Publisher
Joe Boomgaard, Editor
Parting Note: Change has even spread into the MiBiz newsroom. In the adjacent staff box and on the pages ahead, you’ll notice new bylines for Sydney Smith and Jessica Young, two wildly talented journalists who joined our reporting staff in recent weeks. We can’t wait to introduce you to them and bring you more of their reporting in 2019 and beyond.