the economic outlook for michigan...we are getting much older. by 2035, more than 23 percent of...

The Economic Outlook for Michigan

February 19, 2009

Donald R. GrimesUniversity of Michigan

Michigan Department of Environmental Quality

Percentage Change in Real GDP, 1979–2010

–4

–2

0

2

4

6

8

'10'80 ‘82 '84 '86 '88 ‘90 '92 '94 '96 '98 ‘00 ‘02 '04 '06 '08'83 '87 '91 '95 '99 '07'79 '03‘81 '85 '89 '93 '97 ‘01 '05 '09

% Change

U.S. Unemployment Rate, 1979–2010

0%

2%

4%

6%

8%

10%

12%

’10’80 ’82 ’84 ’86 ’88 ’90 ’92 ’94 ’96 ’98 ’00 ’02 ’04 ’06 ’08’83 ’87 ’91 ’95 ’99 ’07’79 ’03’81 ’85 ’89 ’93 ’97 ’01 ’05 ’09

0%

2%

4%

6%

8%

10%

12%

’50 ’55 ’60 ’65 ’70 ’75 ’80 ’85 ’90 ’95 ’00 ’05

Net Investment in the United StatesAs a Share of GDP, 1950 to 2008

Net government investment

Net private investment

–4%

–2%

0%

2%

4%

6%

8%

10%

12%

’50 ’55 ’60 ’65 ’70 ’75 ’80 ’85 ’90 ’95 ’00 ’05

Sources of Savings for the United StatesAs a Share of GDP, 1950 to 2008

Retained earnings

Government savings

Personal savings

Foreign borrowing

0%

5%

10%

15%

20%

25%

30%

35%

40%

0 to 24 25 to 44 45 to 64 65 plus

Population Distribution by Age GroupMichigan, 2005 and 2035

34.6

29.327.5

24.2 25.523.1

2005 2035

0%

5%

10%

15%

20%

25%

30%

35%

40%

0 to 24 25 to 44 45 to 64 65 plus

Population Distribution by Age GroupMichigan, 2005 and 2035

12.4

23.4

2005 2035

We are getting much older. By 2035, more than23 percent of Michigan’s residents will be 65 orolder.

●

Compare this with the situation in Florida today.In the state known as “God’s waiting room,”17 percent of the residents are 65 or older.

●

100120140160180200220240

’90 ’92 ’94 ’96 ’98 ’00 ’02 ’04 ’06 ’08

Comparison of Price Inflation for CPIAll Items and New Vehicles, 1990–2008

Average 1982–84 = 100

All itemsNew vehicles

8

9

10

11

12

50%

55%

60%

65%

70%

75%

’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07

Salesin millionsof units

Marketshare

Detroit Three: Sales of Light Vehiclesand Market Share of Total Sales

United States, 1991–2007

50.4

72.6 Market share Sales

Michigan Employment and Detroit Three Salesof Light Vehicles, 1991–2007

Employment(1000s)

’91 ’93 ’95 ’97 ’99 ’01’92 ’94 ’96 ’98 ’00 ’02 ’04 ’06

Salesin millions

of units

’03 ’05 ’073500

4000

4500

5000

7

8

9

10

11

12

7.61981–82

Employment

Sales

–15%

–10%

–5%

0%

5%

10%

Michigan Per Capita IncomeDeviation from National Average, 1969–2007

’69 ’73 ’77 ’81 ’85 ’89 ’93 ’97 ’01 ’05’71 '75 ’79 ’83 ’87 ’91 ’95 ’99 ’03 ’07

State ranking in the nation (+ D.C.) –10.9

5.3

–3.3

1.1

–2.9

2.4–1.2

13 12

26

17

21

18 17

34

What will determine the future prosperity of a region?

Rich Karlgaard, publisher of Forbes magazine, says:

“Best place to make a future Forbes 400 fortune?Start with this proposition: The most valuable resourcein the 21st century is brains. Smart people tend to bemobile. Watch where they go! Because where they go,robust economic activity will follow.”

http://www.forbes.com/forbes/2003/1006/039.html

States with Highest Per Capita Income in 2007Rankings for Educational Attainment and Income

1970 and 2007Per Capita

Income2007

% Bachelor’sor Higher

2007

Per CapitaIncome1970


1970DCDENJMAWYNYMDCAVANHMI

1 1 4 12 5 3 93 6 7 164 2 12 125 41 23 186 10 6 157 3 11 68 14 8 89 7 30 14

10 9 24 2334 35 13 32

States with Lowest Per Capita Income in 2007Rankings for Educational Attainment and Income

1970 and 2007Per Capita

Income2007


2007

Per CapitaIncome1970


1970AZ 42 31 27 13AL 43 46 49 48ID 44 37 35 28SC 45 40 48 39KY 46 48 45 49NM 47 34 43 11AR 48 49 50 51UT 49 18 38 5WV 50 51 46 50MS 51 50 51 46

Pearson Rank Correlation Coefficient:Per Capita Income and

Percentage of Population 25 and OlderWith At Least a Bachelor’s Degree

1970 2007

0.693 0.813

4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4’06 2007 2008 2009 2010

Michigan Wage and Salary Employment GrowthAnnual Rate (%)

4th Quarter to 4th Quarter Growth Rate (%)

4th Quarter to 4th Quarter Change (Thousands)–1.9 –1.6 –2.5 –4.1 – 0.5

–84.4 –69.3 –105.8 –168.1 – 21.2

– 8– 7– 6– 5– 4– 3– 2–101 Actual Forecast0.1

– 7.0

– 3.0

0.0

–1.40.0

–1.0 – 2.4

Unemployment Rate

0%

2%

4%

6%

8%

10%

12%

’07 ’08 ’09 ’10

7.28.4

11.3 11.3

Rate of Inflation, Detroit CPI

0%

1%

2%

3%

4%

’07 ’08 ’09 ’10

1.9

2.7

0.1

2.3

Michigan Unemployment and Inflation Rates, 2007–10

GFGP RevenueFiscal 1995–2010

0

2

4

6

8

10

12

’95 ’97 ’99 ’01 ’03 ’05 ’07 ’09’96 ’98 ’00 ’02 ’04 ’06 ’08

Billions $

’10

Current $ 1995 $

Employment Change in High- andLow-Education-Attainment Industries, 2001–07

Michigan and United States

2001 2007% Change2001–07

Wage2007

MichiganTotal emp. 4,476,659 4,179,122 –6.65 $43,357High-ed. ind. 1,759,817 1,741,162 –1.06 53,377Low-ed. ind. 2,702,403 2,413,739 –10.68 36,159

United StatesTotal emp.High-ed. ind.Low-ed. ind.

129,635,800 135,366,106 4.42 44,45855,786,611 59,241,247 6.19 58,91573,595,593 75,909,165 3.14 33,173

Growing and Declining Industries in Michigan2002–07

Private nonfarm employment:–183,348change 2002–07

Industry employment change:

decliningunclassified

growing 204,923–403,920

15,649

$36,09549,99640,355

AverageWage2007

Number of industries:growing or unchangeddeclining

419641

growing and outperforming U.S. 298

The Economic and Demographic Outlook

for Michigan and Its Counties to 2035

Supported by theMichigan Department of Transportation

High-Education Industries% of U.S.

Employmentwith Bachelor’sor More, 2000

Average for all industries 27.2%

Private education services 61.2%Professional & technical services 58.0%Management of companies 49.1%Information 39.1%Financial activities 36.0%Government 33.4%Health care, social assistance 32.7%

Average, all high-education industries$42,157

30,11168,82891,79854,62549,69343,40339,530

MichiganAverage

Wage2006

48,216

High-Education Industries in Michigan

Private education svcs.Prof. & tech. svcs.Management of companiesInformationFinancial activitiesGovernmentHealth care,

social assistance

2001High-education industries

73,183366,306

68,84887,123

375,624699,496

551,775

2,222,355

2001–05

19,105– 2,267– 1,558– 6,40948,933

– 12,367

53,656

99,093

19,170123,108

770– 6,10126,649

– 41,821

232,054

353,829

2005–35Employment Change

Low-Education Industries

Average for all industries 27.2%

Arts, entertainment, recreation 26.4%Other services (repair, personal, civic) 19.5%Manufacturing 19.2%Trade, transportation, & utilities 16.4%Administrative services 15.5%Farm, natural resources, mining 13.7%Construction 9.7%Accommodation, food services 8.7%

Average, all low-education industries

% of U.S.Employment

with Bachelor’sor More, 2000

$42,15737,80726,13525,70058,07035,63831,24129,43646,56112,664

MichiganAverage

Wage2006

Low-Education Industries in Michigan

Arts, entertainment, recreationOther servicesManufacturingTrade, trans., utilitiesAdmin. servicesFarm, natural resources, miningConstructionAccommodation, food

Low-education industries

100,369285,445843,743

1,007,145322,152104,019304,276350,383

3,317,532

6,40613,638

–142,839–37,912

33,941–3,658–2,92313,314

–120,033

34,01812,879

–228,794–62,690124,911–27,869

–8,88695,894

–60,537

2001 2001–05 2005–35Employment Change

County Population andEmployment Forecasts

Change in Populationby Michigan County

2005–2035

Growth > statewide average

Growth < statewide average

Decline

Change in Employmentby Michigan County

2005–2035


Growth < statewide average

Decline

The fastest-growing counties in Michigan are clusteredin four geographic areas:

●

The tourist-oriented and retiree-friendly northwesternlower peninsula, particularly the Traverse City area

—


2005–2035



●


—

The urban and suburban Grand Rapids area: moreconcentrated in the growing industries, including tourism

—


2005–2035



●


—


—

The suburban Lansing area: more concentrated inthe growing industries

—


2005–2035



●


—


—

The suburban Lansing area: more concentrated inthe growing industries

—

The area most concentrated in high-educationindustries, comprising the counties of Oakland,Livingston, and Washtenaw counties

—


2005–2035


Although the slowest-growing counties in Michigan arescattered throughout the state, there are three generalareas of greater concentration:

●

The rural areas of the Upper Peninsula—


2005–2035

Decline


●


The area along the shores of Lake Huron—


2005–2035

Decline


●



The strip of counties along the state’s southernborder

—


2005–2035

Decline


●



The strip of counties along the state’s southernborder

—

These areas tend to have an older population and anunfavorable industry mix.

●

The knowledge-based economy, and the educated workers who fuel it, are the fulcrum of futureprosperity in Michigan.

●

Michigan and its communities need to invest in programsto provide the education and training essential for theeconomy of the future.

●

Opportunities for Economic Developmentin Michigan

Bill Gates observed that for knowledge-basedenterprises, educational attainment trumps everythingwhen they’re deciding where to invest.

●

Among activities with fewer educational requirements, the hospitality industry shows promise for the future,providing services to visitors as well as to a growingnumber of older people.

●

Support personnel for industries with the most favorablegrowth prospects—health care and professional/technical services—require skills but often notprofessional degrees.

●

Other actions may show promise for the economicwell-being of the state, but none is more compellingthan investing in workforce development.

●

Opportunities for Economic Developmentin Michigan

UNIVERSITY OF MICHIGANUNIVERSITY OF MICHIGAN

www.ilir.umich.edu/lmr/

the economic outlook for michigan...we are getting much older. by 2035, more than 23 percent of...

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