Experts: Michigan’s economic recovery slowing down
Michigan’s economic recovery has slowed down but is expected to continue through 2020, making it the longest sustained period of job growth in the state since World War II, economists told lawmakers Thursday.
“Moderation in the pace of job growth was bound to come at some time as the state’s job market got tighter,” said Gabe Ehrlich, director of the Research Seminar in Quantitative Economics at the University of Michigan.”
Ehrlich and fellow economists shared state and national data during the bi-annual Consensus Revenue Estimating Conference.
Michigan added roughly 44,000 jobs in 2017, which was the lowest annual rate since the start of the recovery that began in late 2009, according to Ehrlich.
“But in our view, it was still very tangible progress towards a stronger state job market,” he said.
Nationally, economic confidence jumped at the end of 2017 and remains high, added economist Daniil Manaenkov. Wage growth has been “unspectacular” but could increase as the job market tightens and employers offer higher wages to fill open positions.
“Consumers remain confident about what’s going on, and business are also fairly optimistic,” he told lawmakers.
The recently enacted federal tax overhaul, which “sharply” lowers corporate tax cuts and cuts personal income tax rates “modestly” through 2026, will benefit the economy but growth rates are still expected to taper off in coming years, Manaenkov said.
Manufacturing growth slowed as light vehicle sales dipped from 17.5 million units in 2016 to 17.2 million in 2017, with Detroit automakers share dropping from 42.7 percent to 42 percent.
University of Michigan economists are projecting flat auto sales of between 17.3 and 17.1 million units over the next three years, but they’re also predicting overall job growth in the state.
“Michigan’s economy has diversified over the last 20 years, and that should make it easier for the state to add jobs even without employment growth in the manufacturing sector,” Ehrlich said.
While job growth is expected to slow in Michigan, Ehrlich said slow personal income growth rates should increase, from 2.8 percent in 2017 to 4.7 percent this year.
The state’s economic recovery was initially marked by the return of some jobs lost during the Great Recession, “but we expect the star of the show moving forward to be rising incomes, and that should be a welcome development for Michigan residents.”
Michigan’s economy was also the focus during a panel discussion hosted by the Detroit Economic Club on Thursday in Detroit.
Experts at the discussion agreed the state’s economy has bounced back since the Great Recession but added there is more work to do in creating digital age jobs, closing the wealth gap and becoming a leader for autonomous vehicles.
The Michigan Economic Outlook meeting on also highlighted the state’s economic gains in the past few years with panelists agreeing that the state has valuable resources that could make it more competitive.
Speakers included Jeff Mason, CEO of the Michigan Economic Development Corp. and Ellen Hughes-Cromwick, interim associate director and senior economist at the University of Michigan Energy Institute.
Hughes-Cromwick and Mason both said the state’s educational institutions will be critical to moving the economy forward. All of them will need to create programs that prepare students for the technology age, the speakers said.
The future of the economy “is based on the talent we produce, retain and attract in Michigan,” Mason said.
Meanwhile, results from sixth annual Michigan Economic Outlook Survey showed improvements in scores for rating Michigan’s education system as second to none and the state’s ability to attract young professionals. The survey, which was discussed at the panel discussion, also revealed that more people view Michigan as a place to grow a business.
Hughes-Cromwick said the state should be tapping into its resources if it wants to be competitive in the progression of autonomous vehicles.
“I think we have tremendous talent in the automotive area, the mobility area,” she said. “If we work together on that and start developing ... and get the private sector also participating, doing more apprenticeships.”
“I think we are very positioned to leverage this working with great tech companies here in Michigan,” Mason said.
Panelists also discussed the job outlook and the wealth gap in Michigan.
Hughes-Cromwick noted that professional and business service jobs in Michigan have increased in recent years. Technology fields will continue to have the highest demand in the new economy, she said.
“We have to make sure we really love this new-age economy and be part of it,” Hughes-Cromwick said.
But Mason acknowledged the income disparity is still a problem for Michigan and that companies should continue focusing on diversity.
“You can open up the doors to the kind of talent that today might be hidden from you,” Mason said. “There are challenges in some parts of Michigan where some people don’t feel they are part of the growth of the economy.”