Michigan’s business leaders expect an economic decline in the next six to 18 months.
According to Business Leaders for Michigan, a business roundtable that includes top leadership responsible for driving nearly one-third of the state’s economy, its third quarter 2018 survey of members showed 37 percent of business leaders expect an economic decline in the state over the next 18 months.
That’s a significant increase from the second quarter’s decline expectation of 6 percent and the first quarter’s 10 percent.
The 9 percent of respondents expecting growth in the next 18 months also represents a significant drop off from 34 percent last quarter and from 58 percent in the first quarter.
This quarter, 53 percent of respondents expect not much change; those numbers were at 60 percent last quarter and 32 percent in the first quarter.
Expectations for Michigan economic growth over the next six months have dropped to 22 percent of respondents from 57 percent since last quarter. That number was 74 percent during the first quarter.
Respondents’ expectations for the U.S. economy have declined, as well.
Fifty-six percent expect a U.S. economic decline over the next 18 months, which is the first time this year Michigan business leaders are expecting a downturn over that timeframe.
Of the latest survey’s respondents, 22 percent expect improvement and another 22 percent don’t expect much change.
Over the next six months, 31 percent of respondents have a positive view of U.S. economic growth, down from 79 percent in the second quarter and 80 percent in the first.
“After nearly a decade of very strong growth, we’re starting to see some uncertainty reflected in these survey results,” said Doug Rothwell, BLM president and CEO. “Much of it is likely connected to the November elections and what our nation’s and state’s future economic policies will look like.”
As the Business Journal reported Oct. 12, Grand Valley State University economist Paul Isely said the economy likely will be in a recession by the 18-month mark, possibly starting at the end of 2019 or early in 2020.
He said this is due to a number of factors, including a possible decreased level of investment by companies.
When it comes to company capital investments, more business leaders than earlier this year expect numbers to remain steady.
While 41 percent of survey respondents expect investments in Michigan to increase over the next six months, 54 percent of them expect no change in investment dollars.
Surveys from the second quarter showed 49 percent of respondents expected an increase over the next six months and 43 percent of respondents expected no change, while the first quarter showed 52 percent and 45 percent, respectively.
Nearly 40 percent of the latest survey’s respondents expect to add jobs within their companies, while 56 percent expect employment levels to remain about the same.
The second quarter’s numbers on the same indicators were 51 percent and 46 percent, respectively. The first quarter’s survey showed 61 percent of companies expected to add jobs.
“Now, more than ever, it is important for our state to remain cohesive and united behind a clear plan for keeping Michigan competitive,” Rothwell said.