Michigan economy continues to make strides
ANN ARBOR—Steady job growth over the next two years will bring Michigan back to job levels posted just prior to the 2008-09 Great Recession and nearly halfway back to mid-2000 levels, say University of Michigan economists.
In their annual November forecast of the Michigan economy, George Fulton and colleagues Joan Crary and Donald Grimes say the state will add some 130,000 jobs during 2014 and 2015, after gaining about 80,000 jobs this year and more than a quarter million since early 2010.
“The story based on measures of the macroeconomy is largely encouraging and optimistic,” said George Fulton, director of U-M’s Research Seminar in Quantitative Economics. “Michigan is closing out 2013 with a healthy year of growth, the second-largest gain in jobs since 1999.
“Michigan has performed exceedingly well compared with the nation and most other states in private-sector job growth recently, particularly in industries at the better-compensated end of the wage scale. The state is making inroads into replenishing the severe losses it suffered during the opening decade of the 2000s.”
The U-M economists predict job gains of 65,000 in 2014 and another 65,800 in 2015, in excess of the average yearly gain of 57,000 jobs from 1971 to 2000—prior to the downturn of the past decade.
Roughly 60,000 job gains during the next two years will be evenly split among professional and business services and the trade, transportation and utilities sector (which includes retail).
“The professional and business services sector has been a major contributor in the recovery to date,” Fulton said. “Nearly half of the increase in jobs in this sector since the end of 2012 has been in the highly compensated professional, scientific and technical services component, including engineering, accounting and architectural firms.”
Other major sectors projected to add jobs during 2014 and 2015 include construction (21,000 jobs), manufacturing (17,000 jobs) and health care (14,000 jobs).
“Construction has been plagued in recent years by the plunge in the homebuilding market, but we are now seeing some meaningful revival unfolding,” Fulton said. “And health care has the longest string of yearly job gains, having added jobs every year since 1999.”
While manufacturing has led the current recovery since early 2010, its growth will slow over the next two years—reflecting the more mature stages of the recovery overall and the smaller increase in Detroit Three light-vehicle sales, the economists say.
Overall, Fulton and colleagues say that Michigan’s sustained recovery will help lower the state’s unemployment rate from the current rate of 9 percent to 7.9 percent at the end of next year and 7 percent at the end of 2015—which will be about one percentage point above the U.S. rate at that time.
“In all, the continuing recovery in Michigan, including its moderating tempo, is consistent with an expanding U.S. economy, a recovering local housing sector and increasing, albeit slowing, Detroit Three vehicle sales,” Fulton said. “There are parts of society that are not benefiting, or not benefiting fully, from the state’s successes, but Michigan does appear to be positioned for a longer run of macroeconomic resurgence.”
- Research Seminar in Quantitative Economics: www.umich.edu/~rsqe
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