Michigan, Metro Detroit outpaced nation in economic recovery, report says
Posted By: The Detroit News on February 8, 2023. For more information, please click here to read the source article.
Michigan and Metro Detroit have outpaced the nation’s economic recovery in the wake of COVID-19, according to the Detroit Regional Chamber’s State of the Region report released Wednesday.
“Starting in the summer of 2020, the Detroit region and Michigan as a whole really outperformed certainly expectations and in many cases outperformed the United States as a whole,” said Sandy Baruah, president and chief executive officer of the Detroit Regional Chamber. “So a very different dynamic during the pandemic for Michigan’s economic performance compared to prior economic downturns.”
In 2021, the latest year for which the chamber has full-year verified data, both the Detroit region and Michigan outpaced the U.S. in gross domestic product growth, according the report. Michigan’s GDP totaled $481.7 billion in 2021, increasing 7.4% annually. The largest contributors were manufacturing, finance and real estate.
The Detroit regional GDP was up 8.7% in 2021, “which is an incredible, strong number,” Baruah said. “And in 2022, we appear to be on track to match the overall national GDP growth trajectory, if not even just a touch better.”
The nation’s GDP rose 5.7% in 2021.
Baruah notes that since the fall of 2020, the region’s unemployment has been at or below the national average. Heading into 2022, the regional unemployment rate was 2.9% versus 3.4% nationally.
Private sector jobs have recovered to pre-pandemic jobs have recovered, up 2.5% year over year.
Baruah said that while median household income lagged the national average, at $67,153 in 2021, it’s up 5.8% from 2019 and up 20% compared to five years ago.
Pay for private sector workers in the Detroit region was up 5% in the 12 months ending in September 2022. Average weekly wages increased 4% to $1,354 since 2021 and up 17.2% since 2018.
“Our region is matching national trends at this moment for increases in wages and salaries,” Baruah said. “It’s not keeping pace with inflation, but at least we’re keeping pace with what’s happening in the rest of the country, which is better news than we’ve had in past downturns.”
Yasmeen Jasey, Michigan market executive for Citizens Bank, said businesses are proceeding with caution through this time of economic uncertainty.
“Companies are moving along cautiously almost like they’re at a prolonged amber light at a traffic interaction,” she said. “They’re waiting for that light to either move to an advance green where they can kind of focus on growth in 2023. Or it will turn red where companies need to kind of pump the brakes and focus on stability and cost-cutting.”
Baruah said inflation concerns have not stopped consumers from spending. Comparing the third quarter of 2021 to the third quarter of 2022 there was an increase in consumer spending from $13.8 trillion to $14.1 trillion, adjusted for inflation.
“Despite high levels of inflation consumers bought more goods and services then they did a year ago,” he said. “Essentially they are spending through increased prices.”
The increase in consumer spending is cooling, however. In 2021, spending rose 8.3% compared to 2.8% in 2022.
The report points to the growth of new business in Michigan. In 2021, more than 150,000 business applications were filed within the state, a 60% increase from pre-pandemic levels. As of the third quarter of 2022, Michigan business applications totaled 107,559, up 45% from the same period in 2019.
“This is a really strong signal of future economic growth,” he said. “And this might be a factor in thwarting a recession or, if we do have one, making it particularly mild.”
The state had room for improvement when it comes to educational attainment, according to the report. In 2021, the Detroit region had 655,000 adults with some level of higher education but no degree.
“Given that we are lagging our national peers and certainly lagging our peer regions in educational attainment, this is a big challenge for our economy going forward and a big challenge for our companies looking to fill the jobs of the 21st century as they compete on the global playing field,” Baruah said.
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