Written by Mark Sanchex
Michigan’s economy should continue to grow in 2014 and into 2015, adding a projected 130,000 jobs over two years, according to an annual outlook from University of Michigan’s economists.
The economic growth that’s forecast for 2014 will restore employment in Michigan back to the levels prior to the 2008-09 Great Recession and nearly half of the job losses since the middle of the previous decade, the U-of-M forecast said.
Since early 2010, the state has gained more than 250,000 jobs and is closing 2013 with the strongest job gains since 1999, economist George Fulton said. “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,” said Fulton, director of the Research Seminar for Quantitative Economics at the university. “The state is making inroads into replenishing the severe losses it suffered during the opening decade of the 2000s.”
The state should add 65,000 jobs in 2014 and another 65,800 in 2015, cutting Michigan’s unemployment rate from the present 9 percent to 7.9 percent by the end of 2014 and 7 percent by the end of 2015. The job growth, if it pans out, would exceed the average growth rate of 57,000 jobs annually that Michigan experienced from 1971 to 2000.
One key driver for the state’s outlook is the continued resurgence of the U.S. auto industry. PNC Bank economists forecast U.S. auto sales of 15.9 million units in 2014 and 16.2 million in 2015. At U-of-M, economists predict North American light vehicle sales growing to 16.0 million units in 2014 and 16.3 million in 2015, up from an estimated 15.5 million this year. Pent-up demand and the continued rise in the average age of vehicles on the road will help to drive sales, U-of-M economists said.
In a recent survey by Business Leaders for Michigan, respondents by a two-to-one margin said they believe the state’s economy will outperform the nation in 2014, although a stagnant European economy, slow growth in China and uncertain U.S. fiscal policy “has steadily eroded some of that enthusiasm throughout 2013.” More than two-thirds of respondents in the October survey said they believe Michigan’s economy will do better over the next 18 months, and 40 percent indicated that they would add to the work force in the coming six months.