The state’s economy is likely to gradually recover from the pandemic-induced downturn, but the speed and extent of recovery will vary greatly, with higher, longer-term losses disproportionately hitting individuals with lower incomes and skills.
What is the state of Michigan’s economy like?
According to a new Bloomberg opinion piece, Michigan’s economy has placed first among 37 other states with populations bigger than 2 million since the COVID-19 outbreak began two years ago, thanks to Gov. Gretchen Whitmer’s leadership.
“Whitmer today presides over an economy that has improved the most in its history since the pandemic began two years ago,” says Matthew A. Winkler, co-founder of Bloomberg News and author of the article, citing the fact that seven of Michigan’s ten largest companies are now among the top ten global leaders in their industries, highlighting the state’s global appeal for businesses of all sizes to locate and do business.
Michigan’s manufacturing renaissance began in 2019 after the state’s recovery from the 2008 recession. According to the article, non-farm payrolls have increased by 25% since April 2020, over doubling the national average of 14.3% and leading every state in the country. Meanwhile, unemployment in Michigan has dropped to 5.6 percent, from a pandemic high of 23.6 percent.
Winkler can also be heard on Bloomberg Radio discussing the story, stating that Michigan has every reason to be the center of EV manufacturing today and in the future because it is home to global corporations that are completely committed to electric vehicles.
With the recent news of General Motors’ historic investment in the state, the car manufacturer’s pledge to developing an all-electric future, as well as 5,000 new and retained manufacturing jobs, Michigan is already generating national and international headlines. The $7 billion investment includes a $4 billion investment to convert GM’s Orion Township assembly plant to full-size EV pickup production and a $2.5 billion investment to build Ultium’s third U.S. battery cell plant in Lansing, bolstering Michigan’s global leadership in electric vehicle and advanced battery production.
The projects are the first to be approved under new competitive initiatives aimed at retaining and attracting businesses to Michigan, which will complement the state’s already undeniable assets.
Michigan is leading the way toward a more sustainable and inclusive mobility future, not only by manufacturing the next generation of electric vehicles, but also by launching the Michigan Central Innovation District in collaboration with Ford, Google, and the city of Detroit. The district will be a worldwide recognized hub for talent, mobility innovation, entrepreneurship, sustainability, affordable housing, small business possibilities, and community participation, with the classic Michigan Central Train Station as its centerpiece.
To maintain this considerable economic growth and momentum in 2022 and beyond, Michigan will continue to invest in its people, businesses, and Pure Michigan quality of place.
Quentin L. Messer, Jr., CEO of MEDC and President and Chair of the MSF Board, said, “MEDC remains committed to implementing a holistic, people-first approach to economic development, focused on developing a championship economy here in Michigan.” “We’re working hard every day to win projects and create opportunities for Michigan’s risk-taking small businesses and multinational corporations.” Work continues to exist; nevertheless, increased economic opportunity is being felt in every region and neighborhood of our great state.”
Is Michigan’s economy making a comeback?
Michigan’s economy is recovering at a faster rate than in prior downturns, but a steep rise in prices and supply chain issues have soured public opinions of the state’s economy.
Job growth has been strong this year and is anticipated to continue over the next two years, while personal earnings are expected to improve after the pandemic was softened by large-scale government support. High inflation, on the other hand, will continue to erode purchasing power, according to economists at the University of Michigan.
When was Michigan’s last recession?
The enormous employment losses sustained by Michigan’s private sector during the state’s extended downturn, which began in 2001 and lasted through the 2008-09 recession, are well documented. What is less well understood is the impact of Michigan’s economic slump on public sector employment. While employment in the private sector has begun to improve, job losses in the government sector have continued.
Economists have noted the slow rebound from the recession of 2008-09. This delayed recovery is particularly frustrating in Michigan, as the state’s economy could not fully recover from a previous, less severe recession in 2001. As of May 2013, Michigan’s total seasonally-adjusted non-farm employment had climbed by 6.1 percent since the official end of the 2008-09 recession in June 2009. Despite this increase, total employment has decreased by 11.6 percent since the beginning of the 2001 recession in March 2001, and by 13.2 percent from Michigan’s employment high point in April 2000.
While private-sector employment has increased in Michigan, the number of public-sector positions has continued to decline. The private sector workforce has expanded by about 9% from its bottom in July 2009. Public employment, on the other hand, has decreased by nearly 6% over the same time period.
The local government sector, which is twice as large as the state government sector, has been driving the overall fall in public sector jobs. Although some areas of state employment have seen job reductions, job losses in local government have been common. The property market collapse, state policy decisions that affect local government revenue, and, to some extent, privatization of local government services have all contributed to the shrinkage of the local government sector. Local government job losses have now surpassed those in the private sector. Between April 2000 and May 2013, Michigan’s private sector employment plummeted 13.2 percent, while total government employment fell 11.1 percent. Over this time period, state government employment, which includes public universities, climbed by 5.9%, but local government employment, which includes K-12 work, decreased by 16.6%.
In March 2001, the United States entered a recession, just as Michigan’s employment peaked in June 2000. Despite the fact that the national recession of 2001 lasted only eight months, Michigan was believed to be in a single-state recession in the years afterwards. According to the Michigan Department of Technology, Management, and Budget, the single-state recession began in the middle of 2002, as a result of a halt in job recovery following the 2001 recession and a drop in job growth when compared to the rest of the country. It wasn’t until early 2007 that employment and job losses in Michigan began to stabilize. However, as has been well chronicled, any prospects of a full recovery from Michigan’s single-state recession were dashed in December 2007, when the entire country fell into recession. The “Great Recession” of 2008-09 lasted one and a half years, with no declared end date until June 2009.
Between 2000 and 2009, Michigan ranked worst in the country in terms of population growth, real per capita GDP, and employment. Michigan got poorer in comparison to other states as its national ranking for per capita personal income decreased from 19th in 2000 to 41st in 2009.
Following the end of the national recession in mid-2009, the Michigan economy has shown signs of improvement, which coincides with national trends. The state’s real GDP increased by 11% from 2009 to 2012, albeit being below pre-recession levels. In both 2010 and 2011, Michigan’s annual real GDP growth above the national average, and economists predict the state’s GDP growth to continue stable. Michigan’s real GDP growth was the fifth highest in the country in 2011, but it slipped to the 18th highest in 2012. In addition, the state’s unemployment rate fell to 8.8 percent in July 2013, down from 14.2 percent in August 2009. Michigan’s unemployment rate has been the highest in the US for 47 months when February 2010 came to an end. However, Michigan’s unemployment rate has yet to recover to its pre-recession high of 4.7 percent in March 2001.
Similarly, according to Bureau of Labor Statistics data, employment in Michigan has increased since the end of the 2008-09 recession (BLS). Between June 2009 and May 2013, seasonally adjusted total non-farm employment increased by around 6.1 percent. However, since the beginning of the crisis in 2001, Michigan has lost 535,900 jobs, or nearly 11.6 percent of its workforce. As of the first quarter of 2013, Chart 1 depicts the employment composition in Michigan.
The state of Michigan was compelled to undertake significant spending changes as a result of the almost decade-long economic downturn, which changed the makeup of the state budget. State budget decisions had an immediate impact on public sector employment numbers in both the state and local government sectors. Total state spending climbed by 26.3 percent between Fiscal Year 2000 (FY2000) and Fiscal Year 2010, keeping pace with inflation (22.5 percent). However, because state revenue growth was restrained by the effects of the sluggish economy on main tax receipts, much of the additional state spending was covered by federal aid rather than state resources. During the same time period, state spending from state resources increased by only 2.5 percent. As a result, the state budget’s composition changed: state expenditures for K-12 education increased by 8%, corrections increased by 27%, and Medicaid increased by 34%, while funding distributed to local governments through state revenue sharing decreased by 34%, and appropriations for higher education decreased by 14%.
What is Michigan’s economic standing?
“We’d have additional 250,000 people in Michigan’s labor force if we can find methods to remove barriers to employment,… (and) get to the average of where the United States is with labor force participation,” he said. “That’s a big difference.”
BLM’s annual benchmarking study ranked Michigan 29th out of 50 states for economic growth, according to Donofrio “After comparing it to its initial position of 49 in 2010, it was deemed “middle of the pack.”
“Our growth rate isn’t as high as it has to be to truly overtake other states,” said Donofrio.
The yearly research this year included four new indicators. BLM included labor force participation, net migration, the amount of people in poverty, and business formation to standard business climate measurements like GDP, or gross domestic product. Instead of focusing simply on the state’s economy, they indicate how Michigan residents are faring.
Michigan’s scores in the data comparison with other states 2022, ranked from top to lowest, are as follows:
Michigan’s economic climate, poverty, and educational achievement have all improved in the last three years, thanks in significant part to federal fiscal stimulus grants.
How does Michigan generate revenue?
- Tax receipts, license fees, federal funding, and investment returns are the main sources of revenue.
- Government salaries, infrastructure, education, public pensions, public assistance, corrections, Medicaid, and transportation are all examples of expenditures.
- The money borrowed to cover a deficit when revenues fall short of spending is referred to as state debt.
- A credit rating agency assigns a grade to a state’s government and economy based on the general financial health of the state’s government and economy.
- General and other state-based funds are included in state funding. A general fund is defined as “the primary source of funding for a state’s operations.” Other state revenues are “lawfully confined for specific governmental operations or activities.”
- Total spending is determined by summing the sums of state and federal monies used for expenditures.
What is Michigan’s main source of revenue?
Transportation equipment is the state’s largest manufacturing export category, accounting for $28.2 billion of Michigan’s total goods exports in 2018.
Is Michigan a safe place to live?
Michigan is ranked 34th in the nation by the United Health Foundation in terms of overall health, which takes into account characteristics such as smoking, access to care, and life expectancy. However, there are significant variances within the state. Many urban areas, such as those in northern Michigan, have far shorter life expectancy than suburban areas. To discover how a county compares to the state average in terms of health variables, habits, and outcomes, click on it.
What caused Detroit to go bankrupt?
The city of Detroit stopped paying payments on certain of its unsecured commitments, including pension obligations, in June 2013. Orr attempted to persuade some of Detroit’s creditors to accept 10% of what they were due in order to avoid bankruptcy. During a news conference in July, White House Press Secretary Jay Carney said he was unaware of any plans by President Obama to bail out the Detroit city government, comparable to the bailouts of Detroit-area automakers GM and Chrysler in recent years. Detroit’s two largest municipal pension funds filed action in state court on July 17, just one day before the bankruptcy filing, to prohibit Orr from slashing retiree payments as part of his efforts to reduce the city’s budget deficit.
Orr was unable to reach an agreement with Detroit’s creditors, unions, and pension boards after months of negotiations, and filed for Chapter 9 bankruptcy protection in the Eastern District of Michigan U.S. Bankruptcy Court on July 18, 2013. In a letter attached to the court records, Snyder endorsed Orr’s filing. The shrinking tax base due to population decline, program costs for retiree health care and pensions, borrowing to cover budget deficits (since 2008), poor record keeping and antiquated computer systems, the fact that 47 percent of property owners had not paid their 2011 property taxes, and government corruption are some of the named causes for the bankruptcy. For nearly 25 years, two municipal workers’ pension programs have been handing out “13th month” cheques.