Michigan’s largest employers anticipate the state’s economic growth will continue to lag compared to the nation’s. However, they are generally more optimistic about both economies than this time last year.
That is according to survey data collected in fourth quarter of 2019 by Business Leaders for Michigan, a business roundtable that includes top leadership responsible for driving nearly one-third of the state’s economy.
Only 6% of employers expect a strengthened Michigan economy over the next six to 12 months, compared to 26% who are optimistic regarding the U.S. economy.
This is a big change from record-high optimism around this time two years ago when more than 80% of those surveyed anticipated growth in the U.S. economy over the short and long terms and 74% predicted short-term growth for Michigan.
“The business leaders for Michigan’s largest companies continue to believe Michigan’s economy is more likely to grow slower than the nation as a whole — something already well underway,” BLM President and CEO Doug Rothwell said.
However, the majority of recent respondents expect stagnant growth overall with 20% expecting worsening state conditions and 4% expecting the same for the U.S. These stats have improved significantly from the third quarter of 2019 when 37% of business leaders expected worsening U.S. economic conditions and 46% expected a downturn in Michigan.
“Yet, in spite of that outlook, most plan no cutbacks, and many of our largest employers plan to increase investment and jobs in our state,” Rothwell said.
Despite the anticipation for a lagging state economy, the survey data shows 36% of Michigan employers anticipate job growth in their companies and 38% plan additional capital investment. While these stats reflect a decrease of several percentage points in each area year over year, Rothwell said it’s a lot better than a decade ago.
“I think this speaks to the resiliency our companies developed over the past decade and the growing diversity of our economy,” Rothwell said. “Michigan still isn’t as diverse as it needs to be, and that’s the reason behind our slower growth relative to the nation. But we’re still growing despite trade disputes, a slowdown in the manufacturing sector and plateauing auto sales.”
Similar to other areas, the majority of employers expect stagnant job and investment growth. About 8% of employers expect decreased employment growth, an improvement of 10% from the previous year. About the same rate of employers as last year — 12% — expect worsening capital investment in their companies.
This survey data was released shortly after BLM’s latest roadmap for establishing Michigan as a “Top Ten” state.
BLM began collecting and analyzing data on Michigan’s performance 10 years ago, creating a benchmark for growth.
BLM’s latest data ranks Michigan at a decreased 36th in the nation for labor participation rate and a decreased 29th for employment growth. Per capita personal income growth and population growth each have fallen in rank to 42nd and 37th, respectively.
Areas of growth include a better unemployment rate rank of 35th and per capita GDP growth rank of fourth.
To be a “Top Ten” state, Michigan needs 26,000 more residents working, $13,000 more income per person and $15,000 more GDP per person, BLM said.
“We have a great picture of where Michigan stands today on the national scale: better, but still not best,” Rothwell said.
Despite some growth in some areas, BLM recognizes that “huge gaps” remain.
“It’s tough to review some of this data and come to certain realizations: for one, that we’ve been discussing for years how best to improve education and have really failed to move our kids forward,” Rothwell said.
In creating jobs that lead to becoming a “Top Ten” state, Michigan must not only create jobs but good ones, BLM said.
Goals for 2020 include strengthening the state’s business attraction program in partnership with the Michigan Economic Development Corporation; strengthening talent availability through education and attraction; advocating for legislation that raises “sufficient and sustainable” revenue to improve roads and bridges; and leveraging the state’s key industries to create economic growth.
Rothwell said the BLM board feels an urgency to continue engaging these concerns with top policymakers in Lansing.