Forecast for Michigan’s economy – As presented at the 64th Annual Conference on the Economic Outlook
For the state of Michigan, 2016 was the seventh consecutive year of job growth – after a decade of jobs decline. Michigan’s total employment was 4.59 million at the end of September 2016. Even so, total employment in the state has still not quite returned to its peak of 4.9 million in the spring of 2000.
At the annual Economic Outlook Conference held at the University of Michigan in November, presenters forecasted at least two more years of modest job growth for the state (about 1.1% growth each year).
There is still a very tight correlation between the domestic auto industry and the performance of the Michigan economy. The economists forecast total auto sales to essentially remain at current levels for the next two years, and the Detroit Three’s market share to also essentially remain flat over the same period.
However, Michigan’s economy has seen some success in diversifying its job growth away from the manufacturing sector, especially in the highly skilled professional, scientific, and technical services areas, helping to fuel the expectations for modest job gains.
The report forecasts that Michigan’s unemployment rate will hold steady at its 2016 level of 4.6% for 2017 and 2018. This is lower than the national unemployment rate of 4.9% and is a big improvement over the state’s 5.4% rate in 2015.
The conference took place on November 17-18, 2016 – just ten days after the presidential election. While there is uncertainty about the direction of economic policies of the incoming administration, presenter George Fulton indicated the forecast should hold as long as the new administration does not start a trade war. “It is imperative to be clear that a full-blown trade war would be a disaster for the Michigan economy,” said Dr. Fulton, Director of RSQE (Research Seminar in Quantitative Economics) at the University of Michigan and head of the research effort.
He went on to say that he expects much of the campaign rhetoric regarding trade to be overblown, with mostly symbolic actions taking place. GLTAAC agrees, and believes the new administration is unlikely to implement policies that will precipitate a huge contraction in trade.
Highlights of the original study can be found on RSQE’s Michigan Forecast website.