The Backyard Economy: Michigan
A look at this state's economic issues.
— -- "It's the winter that never seems to end," said University of Michigan economist Don Grimes on his state's economy. "It's the bottom of the barrel and has been for an extended period of time."
In the last eight years, Michigan has experienced a prolonged and persistent recession fueled primarily by significant job losses in the auto industry. Grimes called Michigan's slump "unprecedented" and said that no other state has suffered for such an extended period of time.
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But while the state's economic woes have garnered considerable attention, Michigan's problems have not dragged down the rest of the U.S. economy, according to Dana Johnson, the chief economist with Comerica Bank.
"Prior to this year, Michigan's economy was contracting while the rest of the U.S. was still expanding," he said.
The auto industry hopes recent efforts to restructure will pay off and lead to future growth and greater competitiveness. Johnson believes it is poised to grow once the national economy recovers and auto sales increase.
As job losses have mounted and the auto industry has shrunk, Michigan residents have watched their home values plummet. Some cannot sell their homes and many of those are residents moving out of the state.
Newly retired autoworkers are seeking warmer climates in other parts of the country and the result has led to a shrinking of the state's population for two years in a row. Grimes said that is an unusual trend and adds even more stress on the housing market. Fewer buyers and more homes on the market have pushed down prices even more.
Despite the troubles, Grimes said Michigan has two assets that could help carry the state into the future.
It is home to the longest freshwater shoreline in the country, and Michigan's sizable amount of waterfront property could prove to be valuable in the future. Michigan is also home to world-class research universities. Grimes said those universities are now placing more of a focus on commercializing research, and that's a big boost.
"They have clearly gotten on board, and I think they are becoming a major engine for economic development," he said.
Another area of growth has been the health-care industry. While overall the state has lost jobs every year since 2000, the health-care industry has actually grown. The information technology sector has experienced growth as well. Google for example opened an office in Ann Arbor in 2006.
Michigan will continue to tread through rough waters into 2010. Despite that, Johnson has hopes for the state's future.
"Michigan's economy has become more diversified and is going to start growing again," Johnson said.
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