Experts: Jobs in Michigan will continue to grow through 2020

John Gallagher | Detroit Free Press

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Michigan's economy will chug along in the growth lane for another couple of years. But like a car with 200,000 miles on it, the state's economy is moving slower than before and it's more prone to unexpected breakdowns.

That's the essence of the annual forecast by economists at the University of Michigan's Research Seminar in Quantitative Economics. The forecast, delivered Friday morning in Ann Arbor, was authored by U-M economists Jacob T. Burton, Gabriel M. Ehrlich, George A. Fulton, Donald R. Grimes and Michael R. McWilliams.

"Our outlook is that Michigan will see at least two more years of steady job growth," the forecast said, "but considering where its economy sits today in the business cycle, we project that growth will be at a muted tempo, hovering a little under 1 percent per year through 2020."

There are risks to continued growth, including what the U-M economists said were "policy mistakes and unforeseen negative shocks," which could prove more damaging in a slow-moving economy.

"But considering that the state is moving into its 10th year of economic expansion, our outlook for the Michigan economy is about as good as it gets."

Michigan's current economic expansion began as the state started to climb out of the Great Recession. It has now enjoyed nine years of uninterrupted job growth, between the fall quarters of 2009 and 2018. If that growth streak continues, Michigan's economic expansion would set a new record for its duration.

U-M forecasters say that despite some threats, that growth will indeed keep going through 2020.

In specific numbers, the forecast said Michigan will add 55,200 jobs this year, another 35,800 in 2019 and 39,300 in 2020.

"That's the good news," said Ehrlich, director of U-M's Research Seminar in Quantitative Economics. "The mixed news is that job growth is slowing down as the labor market tightens."

If that forecast growth happens, Michigan will have gained 683,200 jobs during the economic recovery from fall 2009 through the end of 2020. That would mean that the state had gained back roughly 80% of the jobs lost since mid-2000, but that the state still won't be back to the peak level of that year.

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Auto sales will remain strong by historic measures if not quite at the record pace of recent years. The forecast see U.S. light vehicle sales dropping from 17.1 million this year to 16.9 million in both 2019 and 2020.

The Detroit Three's share of sales hovers around 41.6 percent, down a notch from a year ago. But sales of the more profitable light trucks will rise from 65 percent of the market in 2017 to 75 percent by 2020, which should help keep profits up.

What are the big unknowns? Trade and tariff disputes could curtail auto sales. The forecasters noted that Ford has said that steel and aluminum tariffs could cost it up to $1 billion.

And there's also the question of where Michigan will find the workers to fill its new jobs. The U-M economists look to greater retention of college graduates and to immigration from abroad — two sources not necessarily guaranteed to be there.

"International migration is an especially important driver of Michigan's population growth because without it, the state's population aged 64 or younger is projected to shrink by 200,000 residents by 2025," Ehrlich said.

But overall, the economists sounded an upbeat note.

"None of the recession indicators that we follow closely are currently signaling a recession in the near future," the forecast said. "That situation could certainly change over the course of our forecast horizon, but our baseline expectation as of now is for continued, but slowing, growth in the U.S. and Michigan economies through 2020."

Contact John Gallagher: 313-222-5173 or gallagher@freepress.com. Follow him on Twitter @jgallagherfreep.