The Economic Outlook for Michigan
February 19, 2009
Donald R. GrimesUniversity of Michigan
Michigan Department of Environmental Quality
Percentage Change in Real GDP, 1979–2010
–4
–2
0
2
4
6
8
'10'80 ‘82 '84 '86 '88 ‘90 '92 '94 '96 '98 ‘00 ‘02 '04 '06 '08'83 '87 '91 '95 '99 '07'79 '03‘81 '85 '89 '93 '97 ‘01 '05 '09
% Change
U.S. Unemployment Rate, 1979–2010
0%
2%
4%
6%
8%
10%
12%
’10’80 ’82 ’84 ’86 ’88 ’90 ’92 ’94 ’96 ’98 ’00 ’02 ’04 ’06 ’08’83 ’87 ’91 ’95 ’99 ’07’79 ’03’81 ’85 ’89 ’93 ’97 ’01 ’05 ’09
0%
2%
4%
6%
8%
10%
12%
’50 ’55 ’60 ’65 ’70 ’75 ’80 ’85 ’90 ’95 ’00 ’05
Net Investment in the United StatesAs a Share of GDP, 1950 to 2008
Net government investment
Net private investment
–4%
–2%
0%
2%
4%
6%
8%
10%
12%
’50 ’55 ’60 ’65 ’70 ’75 ’80 ’85 ’90 ’95 ’00 ’05
Sources of Savings for the United StatesAs a Share of GDP, 1950 to 2008
Retained earnings
Government savings
Personal savings
Foreign borrowing
0%
5%
10%
15%
20%
25%
30%
35%
40%
0 to 24 25 to 44 45 to 64 65 plus
Population Distribution by Age GroupMichigan, 2005 and 2035
34.6
29.327.5
24.2 25.523.1
2005 2035
0%
5%
10%
15%
20%
25%
30%
35%
40%
0 to 24 25 to 44 45 to 64 65 plus
Population Distribution by Age GroupMichigan, 2005 and 2035
12.4
23.4
2005 2035
We are getting much older. By 2035, more than23 percent of Michigan’s residents will be 65 orolder.
●
Compare this with the situation in Florida today.In the state known as “God’s waiting room,”17 percent of the residents are 65 or older.
●
100120140160180200220240
’90 ’92 ’94 ’96 ’98 ’00 ’02 ’04 ’06 ’08
Comparison of Price Inflation for CPIAll Items and New Vehicles, 1990–2008
Average 1982–84 = 100
All itemsNew vehicles
8
9
10
11
12
50%
55%
60%
65%
70%
75%
’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07
Salesin millionsof units
Marketshare
Detroit Three: Sales of Light Vehiclesand Market Share of Total Sales
United States, 1991–2007
50.4
72.6 Market share Sales
Michigan Employment and Detroit Three Salesof Light Vehicles, 1991–2007
Employment(1000s)
’91 ’93 ’95 ’97 ’99 ’01’92 ’94 ’96 ’98 ’00 ’02 ’04 ’06
Salesin millions
of units
’03 ’05 ’073500
4000
4500
5000
7
8
9
10
11
12
7.61981–82
Employment
Sales
–15%
–10%
–5%
0%
5%
10%
Michigan Per Capita IncomeDeviation from National Average, 1969–2007
’69 ’73 ’77 ’81 ’85 ’89 ’93 ’97 ’01 ’05’71 '75 ’79 ’83 ’87 ’91 ’95 ’99 ’03 ’07
State ranking in the nation (+ D.C.) –10.9
5.3
–3.3
1.1
–2.9
2.4–1.2
13 12
26
17
21
18 17
34
What will determine the future prosperity of a region?
Rich Karlgaard, publisher of Forbes magazine, says:
“Best place to make a future Forbes 400 fortune?Start with this proposition: The most valuable resourcein the 21st century is brains. Smart people tend to bemobile. Watch where they go! Because where they go,robust economic activity will follow.”
http://www.forbes.com/forbes/2003/1006/039.html
States with Highest Per Capita Income in 2007Rankings for Educational Attainment and Income
1970 and 2007Per Capita
Income2007
% Bachelor’sor Higher
2007
Per CapitaIncome1970
% Bachelor’sor Higher
1970DCDENJMAWYNYMDCAVANHMI
1 1 4 12 5 3 93 6 7 164 2 12 125 41 23 186 10 6 157 3 11 68 14 8 89 7 30 14
10 9 24 2334 35 13 32
States with Lowest Per Capita Income in 2007Rankings for Educational Attainment and Income
1970 and 2007Per Capita
Income2007
% Bachelor’sor Higher
2007
Per CapitaIncome1970
% Bachelor’sor Higher
1970AZ 42 31 27 13AL 43 46 49 48ID 44 37 35 28SC 45 40 48 39KY 46 48 45 49NM 47 34 43 11AR 48 49 50 51UT 49 18 38 5WV 50 51 46 50MS 51 50 51 46
Pearson Rank Correlation Coefficient:Per Capita Income and
Percentage of Population 25 and OlderWith At Least a Bachelor’s Degree
1970 2007
0.693 0.813
4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4’06 2007 2008 2009 2010
Michigan Wage and Salary Employment GrowthAnnual Rate (%)
4th Quarter to 4th Quarter Growth Rate (%)
4th Quarter to 4th Quarter Change (Thousands)–1.9 –1.6 –2.5 –4.1 – 0.5
–84.4 –69.3 –105.8 –168.1 – 21.2
– 8– 7– 6– 5– 4– 3– 2–101 Actual Forecast0.1
– 7.0
– 3.0
0.0
–1.40.0
–1.0 – 2.4
Unemployment Rate
0%
2%
4%
6%
8%
10%
12%
’07 ’08 ’09 ’10
7.28.4
11.3 11.3
Rate of Inflation, Detroit CPI
0%
1%
2%
3%
4%
’07 ’08 ’09 ’10
1.9
2.7
0.1
2.3
Michigan Unemployment and Inflation Rates, 2007–10
GFGP RevenueFiscal 1995–2010
0
2
4
6
8
10
12
’95 ’97 ’99 ’01 ’03 ’05 ’07 ’09’96 ’98 ’00 ’02 ’04 ’06 ’08
Billions $
’10
Current $ 1995 $
Employment Change in High- andLow-Education-Attainment Industries, 2001–07
Michigan and United States
2001 2007% Change2001–07
Wage2007
MichiganTotal emp. 4,476,659 4,179,122 –6.65 $43,357High-ed. ind. 1,759,817 1,741,162 –1.06 53,377Low-ed. ind. 2,702,403 2,413,739 –10.68 36,159
United StatesTotal emp.High-ed. ind.Low-ed. ind.
129,635,800 135,366,106 4.42 44,45855,786,611 59,241,247 6.19 58,91573,595,593 75,909,165 3.14 33,173
Growing and Declining Industries in Michigan2002–07
Private nonfarm employment:–183,348change 2002–07
Industry employment change:
decliningunclassified
growing 204,923–403,920
15,649
$36,09549,99640,355
AverageWage2007
Number of industries:growing or unchangeddeclining
419641
growing and outperforming U.S. 298
The Economic and Demographic Outlook
for Michigan and Its Counties to 2035
Supported by theMichigan Department of Transportation
High-Education Industries% of U.S.
Employmentwith Bachelor’sor More, 2000
Average for all industries 27.2%
Private education services 61.2%Professional & technical services 58.0%Management of companies 49.1%Information 39.1%Financial activities 36.0%Government 33.4%Health care, social assistance 32.7%
Average, all high-education industries$42,157
30,11168,82891,79854,62549,69343,40339,530
MichiganAverage
Wage2006
48,216
High-Education Industries in Michigan
Private education svcs.Prof. & tech. svcs.Management of companiesInformationFinancial activitiesGovernmentHealth care,
social assistance
2001High-education industries
73,183366,306
68,84887,123
375,624699,496
551,775
2,222,355
2001–05
19,105– 2,267– 1,558– 6,40948,933
– 12,367
53,656
99,093
19,170123,108
770– 6,10126,649
– 41,821
232,054
353,829
2005–35Employment Change
Low-Education Industries
Average for all industries 27.2%
Arts, entertainment, recreation 26.4%Other services (repair, personal, civic) 19.5%Manufacturing 19.2%Trade, transportation, & utilities 16.4%Administrative services 15.5%Farm, natural resources, mining 13.7%Construction 9.7%Accommodation, food services 8.7%
Average, all low-education industries
% of U.S.Employment
with Bachelor’sor More, 2000
$42,15737,80726,13525,70058,07035,63831,24129,43646,56112,664
MichiganAverage
Wage2006
Low-Education Industries in Michigan
Arts, entertainment, recreationOther servicesManufacturingTrade, trans., utilitiesAdmin. servicesFarm, natural resources, miningConstructionAccommodation, food
Low-education industries
100,369285,445843,743
1,007,145322,152104,019304,276350,383
3,317,532
6,40613,638
–142,839–37,912
33,941–3,658–2,92313,314
–120,033
34,01812,879
–228,794–62,690124,911–27,869
–8,88695,894
–60,537
2001 2001–05 2005–35Employment Change
County Population andEmployment Forecasts
Change in Populationby Michigan County
2005–2035
Growth > statewide average
Growth < statewide average
Decline
Change in Employmentby Michigan County
2005–2035
Growth > statewide average
Growth < statewide average
Decline
The fastest-growing counties in Michigan are clusteredin four geographic areas:
●
The tourist-oriented and retiree-friendly northwesternlower peninsula, particularly the Traverse City area
—
Change in Employmentby Michigan County
2005–2035
Growth > statewide average
The fastest-growing counties in Michigan are clusteredin four geographic areas:
●
The tourist-oriented and retiree-friendly northwesternlower peninsula, particularly the Traverse City area
—
The urban and suburban Grand Rapids area: moreconcentrated in the growing industries, including tourism
—
Change in Employmentby Michigan County
2005–2035
Growth > statewide average
The fastest-growing counties in Michigan are clusteredin four geographic areas:
●
The tourist-oriented and retiree-friendly northwesternlower peninsula, particularly the Traverse City area
—
The urban and suburban Grand Rapids area: moreconcentrated in the growing industries, including tourism
—
The suburban Lansing area: more concentrated inthe growing industries
—
Change in Employmentby Michigan County
2005–2035
Growth > statewide average
The fastest-growing counties in Michigan are clusteredin four geographic areas:
●
The tourist-oriented and retiree-friendly northwesternlower peninsula, particularly the Traverse City area
—
The urban and suburban Grand Rapids area: moreconcentrated in the growing industries, including tourism
—
The suburban Lansing area: more concentrated inthe growing industries
—
The area most concentrated in high-educationindustries, comprising the counties of Oakland,Livingston, and Washtenaw counties
—
Change in Employmentby Michigan County
2005–2035
Growth > statewide average
Although the slowest-growing counties in Michigan arescattered throughout the state, there are three generalareas of greater concentration:
●
The rural areas of the Upper Peninsula—
Change in Employmentby Michigan County
2005–2035
Decline
Although the slowest-growing counties in Michigan arescattered throughout the state, there are three generalareas of greater concentration:
●
The rural areas of the Upper Peninsula—
The area along the shores of Lake Huron—
Change in Employmentby Michigan County
2005–2035
Decline
Although the slowest-growing counties in Michigan arescattered throughout the state, there are three generalareas of greater concentration:
●
The rural areas of the Upper Peninsula—
The area along the shores of Lake Huron—
The strip of counties along the state’s southernborder
—
Change in Employmentby Michigan County
2005–2035
Decline
Although the slowest-growing counties in Michigan arescattered throughout the state, there are three generalareas of greater concentration:
●
The rural areas of the Upper Peninsula—
The area along the shores of Lake Huron—
The strip of counties along the state’s southernborder
—
These areas tend to have an older population and anunfavorable industry mix.
●
The knowledge-based economy, and the educated workers who fuel it, are the fulcrum of futureprosperity in Michigan.
●
Michigan and its communities need to invest in programsto provide the education and training essential for theeconomy of the future.
●
Opportunities for Economic Developmentin Michigan
Bill Gates observed that for knowledge-basedenterprises, educational attainment trumps everythingwhen they’re deciding where to invest.
●
Among activities with fewer educational requirements, the hospitality industry shows promise for the future,providing services to visitors as well as to a growingnumber of older people.
●
Support personnel for industries with the most favorablegrowth prospects—health care and professional/technical services—require skills but often notprofessional degrees.
●
Other actions may show promise for the economicwell-being of the state, but none is more compellingthan investing in workforce development.
●
Opportunities for Economic Developmentin Michigan
UNIVERSITY OF MICHIGANUNIVERSITY OF MICHIGAN
www.ilir.umich.edu/lmr/