Economists feel pretty good about 2020 forecast
There won’t be a national recession in the next couple of years, and Michigan should see some moderate job growth, continued low unemployment, and even a rise in local incomes. At least, that’s what economists from the University of Michigan are predicting in their big 2020 forecast, which they presented to Lansing in November.
And 2019 was a real test for the state, between an unpredictable trade war, declining vehicle sales for the Detroit 3, and the UAW strike. But Michigan’s economy managed to hang in there, says Mike McWilliams, a Michigan Forecasting Specialist at the University of Michigan’s Research Seminar in Quantitative Economics.
“And yet, you know, despite these challenges, the state economy has managed to hang in there,” McWilliams says. “...We think this year has presented this kind of tough external environment. But we see that changing from kind of more of a negative external environment to more neutral. And that as that happens, we should see the economy bounce back a little bit.”
Still, don’t expect job growth numbers to be what they were a couple years ago.
“It’s just not sustainable anymore. Unemployment is low. There are actually more job openings in the state now than there are unemployed people,” he says. “And if you compare that with the depths of the recession, when there were twelve times as many unemployed people as job openings, it's really striking. So that's why we sort of forecast more muted moderate job growth going forward.”
That’s also a regional trend, says Michigan State University economics professor Charles Ballard. “So the upper Midwest, while the rest of the country has added 1.3 million jobs so far this year, our region of the country has had flat or slightly declining growth,” he says.
“That's partly because of the stresses on manufacturing...but part of it is that you get to the point where you've used up just about all the workers that are employable."
The stress on manufacturing is part of that, Ballard says, but it’s also a broader problem.
“The other thing that I think has put sort of a limit on how much employment growth we can have, is that we've got a lot of workers in Michigan who don't fit in very well with the modern economy. Because they lack the skills, or because addiction issues makes it very difficult for employers to use them.”
Michigan’s been particularly slow to adapt to a skills-based job market, Ballard says. And that’s a real concern because massive changes may be coming for the auto industry, says McWilliams, the University of Michigan economist.
“There's a lot of talk about how electric vehicles require fewer workers to assemble,” he says. “And if we move to a more electrified fleet, then that has potentially a big implication for jobs in southeast Michigan in particular. Are we going to continue to be the center of the automotive industry, if we move to autonomous vehicles? I think we're doing a great job of of of trying to maintain that and trying to be there... But, you know, if I'm looking for sort of the big potential risks down the line, that's definitely one thing that I would think about.”