In the last few months, major Michigan employers have announced job cuts, the state's unemployment rate has risen and disposable income per capita has declined.
What does that mean for the state's future?
A recently released economic forecast for the state from the University of Michigan Research Seminar in Quantitative Economics said it can go two ways.
"The first paints a challenging picture, with slowing job growth, rising unemployment and hardly any growth in real disposable incomes," U-M economists Jacob Burton, Gabriel Ehrlich and Michael McWilliams wrote in the report published Tuesday . "The second offers a more optimistic outlook, with statewide growth persisting through a period of high inflation and interest rates, and a subsequent slowdown in national economic growth."
‘Cracks have started to show’ in the state's economy
At the end of last year, the economists said Michigan’s economy was nearing a complete recovery from the pandemic recession in the face of supply chain shortages, high inflation, rising interest rates and even the UAW's strike against the Detroit Three automakers .
They now say, though, that "cracks have started to show recently in the foundation of Michigan’s previously vigorous economic recovery. ..."
Some of those cracks include layoffs at major employers in metro Detroit.
General Motors said in August that it is eliminating more than 1,000 jobs in its software division globally, with 634 of the jobs being cut coming from its Global Technical Center in Warren. Meanwhile, Stellantis said that its Warren Truck Assembly will lose a shift later this year, which could potentially affect 2,450 workers .
It's not just the automakers themselves that are being impacted. For example, shortly after GM's decision this summer to overhaul its agency roster , advertising agency Commonwealth/McCann said it was laying off 56 employees .
These cuts and others are reflected in key economic indicators for the state.
Michigan's unemployment rate rose to 4.4% in July, the second consecutive month with a statewide increase in the jobless rate, according to the most recent data from the Michigan Department of Technology, Management and Budget. Last year in July, the unemployment rate was 3.7%.
How Michigan's economy compares to the U.S.
Most recently, more than 5,700 new claims for unemployment insurance benefits were filed last week in Michigan , a 17% increase from the same week last year , according to U.S. Department of Labor data released Thursday.
Nationally, there were 227,000 new claims for benefits last week, a decrease of 5,000 claims compared with the week prior and down from 234,000 new claims that were filed the same week last year.
The U-M economists, though, predict a period of slower national growth ahead and their forecast shows Michigan's economy following a similar pattern "with job growth slowing substantially, yet staying in positive territory on an annual basis through 2026."
More details on layoffs: What to know about WARN Act notices and why they precede big layoffs
More on the impact of higher prices: A new wave of discounters open stores in metro Detroit as shoppers seek deals
Economists are optimistic
Michigan’s unemployment rate will rise from an average of 3.9% in 2023 to 4.2% this year and 4.7% next year before dropping back down slightly to 4.6% in 2026, the forecast said.
The researchers said that if their forecast is accurate, Michigan will have added jobs in every year but one (2020) in the 16 years from 2011–2026, which gives them optimism about the state's future.
"We interpret our forecast of continued job growth as a testament to the ongoing diversification and growing resilience of Michigan’s economy, even in the face of a tough external environment," they said.
Contact Adrienne Roberts: amroberts@freepress.com
This article originally appeared on Detroit Free Press: U-M forecast says Michigan's economy at a crossroads: What the next two years may bring
Most Popular
Comments / 0