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Michigan To See Slow but Steady Growth in 2019-2020

Wednesday, November 21, 2018   (0 Comments)
Posted by: Liz Szlaga

MICHIGAN TO SEE SLOW BUT STEADY GROWTH IN 2019-2020Michigan is on track to reach the longest period of job growth in the third quarter of this year, and that trend will continue for the next two years, according to economists with the University of Michigan. In releasing their Economic Outlook for 2019-2020, the group of economists noted the state is also on track to set the record for the longest period of job expansion: 683,200 jobs gained during the economic recovery from 2009-the end of 2020.

 

According to the Outlook, the state is expected to add 35,800 jobs in 2019 and 39,300 in 2020; though it is growth, it is a slower rate than the 1.9 percent seen from 2011-2016. Director of the University of Michigan’s Research Seminar in Quantitative Economics, Gabriel Ehrlich, commented on the results of the Outlook noting that along with the steady job growth, the state will also see, “low unemployment, tame inflation and solid income growth.”

 

Mr. Ehrlich, along with economists George Fulton, Donald Grimes and Michael McWilliams and researcher Jacob Burton, stated the Outlook “is about as good as it gets” for how far along the state already is in economic expansion. The group also found that projected unemployment rates will be the lowest they have ever been in the state, falling to 3.9 percent in 2019 and 3.8 percent in 2020.

 

Along with the decrease in unemployment rates, Mr. Ehrlich and his team also reported an increase in wage growth and personal income will be seen, rising by 3.73 percent in 2019 and 4.28 percent in 2020. However, the Outlook did not take into account the recent legislative approval of a minimum wage increase, as the future of that proposal may change during the Lame Duck session. Mr. Ehrlich said the Outlook was prepared on current law, and therefore any changes to minimum wage would have only a slight impact as the current job market is so strong.

 

The group did use projections of sales and excise tax revenue from the recently passed allowance of recreational use of marijuana in the state, noting the approval will produce $35 million in additional revenue for Michigan beginning in 2020. A major factor in the team’s projections was the ruling of the Supreme Court decision to allow states to be more aggressive in their collection of sales tax for online sales; the ruling could mean an additional $180 million in 2019 and $214 million in 2020 in sales tax revenue for Michigan.

 

For the overall growth of state revenue, the economists project General Fund tax revenues will decrease slightly by 0.9 percent in 2019 but rise again in 2020 by 1.9 percent. In the School Aid Fund, revenues are projected to increase by 2.6 percent in 2019 and 3.5 percent in 2020.

 

For Michigan, auto sales, construction and manufacturing jobs will all be impacted in the coming years as well: light auto sales are forecasted for the Detroit Three to decline to 16.9 million units in both 2019 and 2020, though light truck sales are expected to rise to 75 percent by 2020; an additional 3,300 manufacturing jobs will be available in 2019 and another 2,200 in 2020; and construction jobs will increase by 8,300 by 2020.


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