Jobs outlook dim for 2 more years
U-M economists predict more losses before recovery
BY JOHN GALLAGHER
FREE PRESS BUSINESS WRITER
November 18, 2006
Michigan will endure at least another year or two of job losses, on top of six straight years of decline, before seeing a recovery in labor markets, University of Michigan economists predicted Friday in their annual Michigan economic forecast.
The ominous prediction confirms what many had long suspected -- that Michigan is going through the longest stretch of job losses since the Great Depression of the 1930s.
Since mid-2000 to the end of this year, the state will have lost 336,000 jobs out of its roughly 5-million person workforce, and it will lose another 33,000 jobs in the next two years, the U-M outlook said. Most of these losses have been in the hard-hit manufacturing sector, particularly the automotive industry.
The losses to come will translate into Michigan's unemployment rate rising from an average of 6.8% this year to 7.5% next year and 7.7% in 2008 -- the highest rates since 1992.
"The Michigan economy is fighting its way through a long stretch of stormy weather, trying to ride out the turbulence generated by the ongoing restructuring among the domestic automakers," said U-M economist George Fulton in remarks prepared for delivery Friday morning in Ann Arbor. The remarks were released to the media Thursday.
"The Michigan labor market will continue to flounder. Dreary as this outlook may be, we do see some improvement developing over its horizon. By the close of 2008, job growth barely nudges into positive territory," he said.
Delivered each year since 1973, the U-M forecast is among the most-respected predictions of Michigan's economic future, widely relied on by government, business and academia for planning investments and mapping strategies.
By predicting no upswing in the state's job market until the end of 2008, the U-M forecasters injected another year of losses into its outlook. A year ago, the U-M economists were predicting Michigan's job slide would end in 2007.
This time, though, Fulton and colleagues Joan Crary and Saul Hymans predicted the state would lose 24,000 jobs during 2007 and another 9,000 during 2008, mainly due to heavy losses in manufacturing.
The state will lose more than 40,000 manufacturing jobs over the course of this year, nearly 30,000 next year and another 24,000 during 2008, they said. The auto industry will account for about 70% of these manufacturing job losses.
"The state economy reflects not simply the fortunes of the auto industry as a whole, but ... the well-being of the traditional domestic producers, or Big Three -- General Motors, Ford and the Chrysler Group," Crary said.
"From 2001 to 2005, the Big Three's market share plummeted 7 percentage points. The situation went from bad to worse this year as soaring gasoline prices had consumers tightening their belts and focusing on fuel economy. It now appears that Big Three market share will plunge by nearly 3 percentage points this year."
There was some good news amid the gloom. Michigan's service sector should add more than 20,000 jobs this year, nearly 13,000 jobs in 2007, and just shy of 17,000 in 2008.
Almost half of these gains will occur in private education and health services, the only major industry to have grown throughout the extended downturn in the Michigan economy.
U-M economists predict more losses before recovery
BY JOHN GALLAGHER
FREE PRESS BUSINESS WRITER
November 18, 2006
Michigan will endure at least another year or two of job losses, on top of six straight years of decline, before seeing a recovery in labor markets, University of Michigan economists predicted Friday in their annual Michigan economic forecast.
The ominous prediction confirms what many had long suspected -- that Michigan is going through the longest stretch of job losses since the Great Depression of the 1930s.
Since mid-2000 to the end of this year, the state will have lost 336,000 jobs out of its roughly 5-million person workforce, and it will lose another 33,000 jobs in the next two years, the U-M outlook said. Most of these losses have been in the hard-hit manufacturing sector, particularly the automotive industry.
The losses to come will translate into Michigan's unemployment rate rising from an average of 6.8% this year to 7.5% next year and 7.7% in 2008 -- the highest rates since 1992.
"The Michigan economy is fighting its way through a long stretch of stormy weather, trying to ride out the turbulence generated by the ongoing restructuring among the domestic automakers," said U-M economist George Fulton in remarks prepared for delivery Friday morning in Ann Arbor. The remarks were released to the media Thursday.
"The Michigan labor market will continue to flounder. Dreary as this outlook may be, we do see some improvement developing over its horizon. By the close of 2008, job growth barely nudges into positive territory," he said.
Delivered each year since 1973, the U-M forecast is among the most-respected predictions of Michigan's economic future, widely relied on by government, business and academia for planning investments and mapping strategies.
By predicting no upswing in the state's job market until the end of 2008, the U-M forecasters injected another year of losses into its outlook. A year ago, the U-M economists were predicting Michigan's job slide would end in 2007.
This time, though, Fulton and colleagues Joan Crary and Saul Hymans predicted the state would lose 24,000 jobs during 2007 and another 9,000 during 2008, mainly due to heavy losses in manufacturing.
The state will lose more than 40,000 manufacturing jobs over the course of this year, nearly 30,000 next year and another 24,000 during 2008, they said. The auto industry will account for about 70% of these manufacturing job losses.
"The state economy reflects not simply the fortunes of the auto industry as a whole, but ... the well-being of the traditional domestic producers, or Big Three -- General Motors, Ford and the Chrysler Group," Crary said.
"From 2001 to 2005, the Big Three's market share plummeted 7 percentage points. The situation went from bad to worse this year as soaring gasoline prices had consumers tightening their belts and focusing on fuel economy. It now appears that Big Three market share will plunge by nearly 3 percentage points this year."
There was some good news amid the gloom. Michigan's service sector should add more than 20,000 jobs this year, nearly 13,000 jobs in 2007, and just shy of 17,000 in 2008.
Almost half of these gains will occur in private education and health services, the only major industry to have grown throughout the extended downturn in the Michigan economy.
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