Economic outlook shows slower growth for West Michigan

"This is an amazing number because this is some of the highest paid jobs that we have for middle income people, and it's dropping really, really fast," Isely said.

"A lot of this has to do with government uncertainty around regulations that go with cars and government uncertainty around tariffs."

The report also identifies broader policy pressures on the West Michigan economy. Tariffs are squeezing profit margins as businesses absorb higher import costs.

"We've been told the other countries are paying the tariffs, so therefore we're collecting money that isn't hurting our economy, but this is simply not true," Isely said.

More than half of surveyed firms cited state policies - the increase in minimum wage, the Earned Sick Time Act and other regulations - as barriers to growth.

"The government is slowing business in ways that we've never seen before," Isely said. "Businesses have always complained about regulation, hopping through things and government intrusion, but we've never actually seen it change how businesses invest."

As profits shrink, Isely said, more firms are shedding middle management positions and investing in, and relying on, artificial intelligence to maintain productivity.

"AI investment is hiding weakness everywhere else," Isely said. "In fact, the U.S. economy this year would have been in recession if we took out AI investment."

Isely projects the region's economy to see some resilience and slowly emerge this spring and summer. The tax cuts implemented with the Trump administration's "Big Beautiful Bill," along with falling interest rates, could spur business investment later this year, Isely said.

"We have some good markers that there will be some help coming in the second half of the year, and as long as we don't mess it up, that'll be good news," Isely said.

"Don't expect great breakneck growth, and there are some substantial downside risks, but right now those don't seem to be coming into play, and we'll be watching for those."