Michigan’s economy continues to claw its way back to prosperity as the state’s economic health and vitality improves.
Michigan’s economic backdrop today couldn’t be more different than the period of 2001 to 2009, also known as Michigan’s “Lost Decade.” Michigan’s unemployment rate, which peaked at 15.2 percent in August of 2009, has declined to 6.7 percent at the end of August 2014. While still above the national average of 5.9 percent, it’s positive improvement for the state.
Fortunately for Michigan, manufacturing jobs are being generated, which are well-paid positions that the rest of the country has struggled to create. Since January 2010, Michigan has led the nation in manufacturing employment growth, with a growth rate of 21.8 percent, versus only a 5 percent growth rate for manufacturing jobs in the country as a whole.
The most common complaint today among those in the Michigan manufacturing sector is the shortage of skilled workers.
Five years ago, needing more skilled workers, not less, was unfathomable.
Several of 2013’s concerns seem to be headed towards favorable resolutions in 2014. Detroit’s bankruptcy filing, which was the largest Chapter 9 filing in history, is moving through the legal process with an amazing lack of rancor and confrontation.
Almost all parties involved have come to an agreement on how to proceed through the bankruptcy filing without placing the city, and its residents, through years of contentious, and costly, legal wrangling.
Auto sales continue to solidify, up to a 16.33 million-unit pace at the end of September, which is supported by low financing costs, improving consumer balance sheets, and low gas prices. In addition, today’s 11-year average vehicle age doesn’t hurt 2015 sales prospects. Finally, Michigan’s Index of Leading Economic Indicators, which declined sharply in the first quarter, has rebounded, indicating that a stronger pace of economic activity is expected in the next six-to-twelve months.
Unfortunately, all of 2014’s good news does not necessarily mean that 2015 will be smooth sailing. We’ve experienced enough financial turmoil in the last five years to understand that there’s always some level of distress in the markets and the broader economy. The global growth outlook has dimmed recently, thanks to weakness in Europe caused by the still simmering Ukrainian conflict, a clear slowdown in China (compounded by the protests now unfolding in Hong Kong), and the unknown impact of the Ebola crisis on world travel. However, there is a clear disconnect in global economic prospects today.
While the rest of the world appears to be slowing, the pace of activity for the overall U.S. economy appears to be improving. Inflation is low, crude oil prices are declining, interest rates are low, the unemployment rate continues to decline, and the overall pace of economic activity continues to slowly improve.
We acknowledge the potential for volatility in the financial markets, and a decline from the peak would not surprise us, but the fundamental strength of today’s domestic economy, including low inflation, improving growth, and low interest rates, should not be ignored. The road might be rocky, but it doesn’t look like it’s headed over a cliff. This is good news for those of us here in Michigan.
Source: MEDC