Business leaders more optimistic on Michigan, but challenges remain
Posted By: The Detroit News on January 16, 2024. For more information, please click here to read the source article.
Sector leaders in Michigan showed modestly increasing optimism in the economic outlook and that Michigan is a good place to business, according to annual survey results from Ann Arbor’s Baker Strategy Group.
The state posted improvement in four of five key measurements identified by the consultancy with a question around whether the state is a great place for young professionals the only one to fall. That’s a significant point of discussion as Michigan experiences an aging population that is growing slower than its neighboring states.
“When we talk about our population challenges … population growth and economic growth are sort of mutually reinforcing,” Michigan Chief Growth Officer Hilary Doe said during a meeting of the Detroit Economic Club at the MotorCity Casino Hotel, moderated by The Detroit News’ Senior Business Editor & Columnist Daniel Howes, where the survey results were shared. “Michigan particularly has to be cognizant of the fact that … we were losing more folks than we’re gaining historically, so that’s a particular concern.”
More survey respondents say they are likely to recommend Michigan as a place to do business than last year, with the score rising to 71 from 69 on a scale of 100. Their view of the state’s economy improved, too, with 42% holding a somewhat or extremely positive outlook compared to last year’s 36%. Negative views fell to 30% from 38%.
Breaking that down, leaders responded that they view the next six months as more difficult than they had a year ago with sentiment on the 100-point scale falling to 67 from 70. The 12-month outlook was flat at 71, but the three-year outlook improved to 75 from 73.
Gabriel Ehrlich, director of research seminar in quantitative economics at the University of Michigan, said that aligns with the university’s state economic forecast.
“We do expect Michigan to have a little bit of a soft patch for economic growth in the early part of this year,” Ehrlich said. “High interest rates are going to make it tough. It’s a challenge for the mortgage industry, the auto industry, the building trades, so you have that challenge. The good news is inflation is falling right now. That’s going to leave the Federal Reserve space to pivot away from fighting inflation and towards supporting growth a little more and actually get some relief to Michigan. We expect growth to start picking up in the second half of this year and then into 2025.”
Around the five key metrics at which the survey looked, indicators including that Michigan is a great state to raise a family rose to 73 from 71, is business-friendly increased to 62 from 61, has a strong economy went to 61 from 59 and is on the right track increased to 61 from 59. The goal is to see the results in the 70s and 80s.
The one indicator that fell was whether Michigan is a great state for young professionals, which dropped to 64 from 65.
Gov. Gretchen Whitmer launched the Growing Michigan Together Council that developed a set of policy recommendations to help grow the state’s population. Doe said that work showed neighboring states with growing populations had higher median incomes, greater bachelor’s degree attainment and walkable communities with access to transportation.
“Cost of living and keeping costs low is critical as part of the formula and is one thing that we have to offer,” Doe said. “It’s not sufficient by itself. We really have to have that quality of place, every opportunity along with cost of living.”
The policy recommendations will seek to improvement in those areas, but that could take years. Quentin Messer Jr., CEO of the Michigan Economic Development Corp., said Michigan and its residents can help sharing what makes the Great Lakes State a desirable place to live, work and play today.
“You have to win the recruiting battle in your own backyard,” Messer said. “If the people who know us the best and know us the longest give us a pass (on staying), then it’s going to be harder for those who you’re trying to encourage or who may not know us, or may know us only in passing or having dated perception.”
Ehrlich added that policies extend beyond those within the state to immigration policy, as well.
“The reality is, for the foreseeable future,” he said, “we really are going to be looking at international immigration if we want to grow the way that state leaders say they want to grow.”
Alex Akins is just the kind of resident Michigan is seeking to attract. The 26-year-old Indiana native attended school at the University of Detroit Mercy, stayed and is working in the financial sector.
“I wanted to work in a city, and growing up in Indiana, it’s been a breath air,” he said after the DEC’s presentation, but “I’ve had a lot of friends go to Austin, (Texas), and out west to San Diego.”
His peers, he says, have gone for jobs that they view as exciting and innovative. He thinks examples like the University of Michigan’s research and education center are a smart step forward to help fuel excitement for Detroit and Michigan.
Patrick Lindsey, 64, of Detroit is Wayne State University’s vice president of government and community affairs. Following the discussion, he emphasized the work in the school’s efforts to educate students economically and socially, noting that many live in Detroit, are active in the community, and volunteer.
“More than 80% of our students,” he said, “stay after graduation.”
« Back to Insights