Lansing — Michigan’s economic recovery has slowed but is expected to continue through 2020, making it the longest period of sustained job growth in the state since World War II, economists told lawmakers Thursday.
“Moderation in the pace of job growth was bound to come at some time as the state’s job market got tighter,” said Gabe Ehrlich, director of the Research Seminar in Quantitative Economics at the University of Michigan.”
Ehrlich and fellow economists shared state and national data during the biannual Consensus Revenue Estimating Conference, where officials will set projections that lawmakers will use to craft upcoming budgets.
Michigan added roughly 44,000 jobs in 2017, which was the lowest annual rate since the start of the recovery that began in late 2009, Ehrlich said.
“But in our view, it was still very tangible progress towards a stronger state job market,” he said.
Nationally, economic confidence jumped at the end of 2017 and remains high, said economist Daniil Manaenkov. Wage growth has been “unspectacular” but could increase as the job market tightens and employers offer higher wages to fill open positions, Manaenkov said.
“Consumers remain confident about what’s going on, and business are also fairly optimistic,” he told lawmakers.
The federal tax overhaul signed in December, which “sharply” lowers corporate tax cuts and cuts personal income tax rates “modestly” through 2026, will benefit the economy but growth rates are still expected to taper off in coming years, Manaenkov said.
Manufacturing growth slowed as light vehicle sales dipped from 17.5 million units in 2016 to 17.2 million in 2017, with Detroit automakers’ market share dropping from 42.7 percent to 42 percent.
University of Michigan economists are projecting flat annual auto sales of between 17.3 and 17.1 million units over the next three years, but they’re also predicting overall job growth in the state.
“Michigan’s economy has diversified over the last 20 years, and that should make it easier for the state to add jobs even without employment growth in the manufacturing sector,” Ehrlich said.
While job growth is expected to slow in Michigan, Ehrlich said sluggish personal income growth rates should increase from 2.8 percent in 2017 to 4.7 percent this year as employers compete for a smaller pool of jobless workers.
The state’s economic recovery was initially marked by the return of some jobs lost during the Great Recession, but not all jobs have returned. Michigan lost 858,100 jobs between 2000 and 2009, Ehrlich said, predicting a total of 722,700 recovered jobs through 2020.
“We expect the star of the show moving forward to be rising incomes, and that should be a welcome development for Michigan residents,” Ehrlich said.