Big 3 Lead Michigan Recovery, But Still Some Bumps

BIRMINGHAM, MI – Experts at an economic forecast event in Birmingham earlier this week said Michigan is outpacing the rest of the country in manufacturing, in large part because of the recovery of Detroit’s Big Three and the automotive industry, The Birmingham Eccentric reported.

Speakers at the sold-out Birmingham Bloomfield Chamber’s annual Economic Forecast Breakfast, held Tuesday at the Townsend Hotel, were Paul Traub, senior business economist at the Detroit Branch of the Federal Reserve Bank of Chicago, and Tony Vernaci, vice president of global development for the Michigan Economic Development Corp.

Traub expects the auto industry, which ended 2015 with record sales, to continue the trend over the next two years. He also noted unemployment at around 5 percent and high consumer confidence in Michigan, but said too many people are still without jobs. About 400,000 jobs lost in the recession have yet to return, he said.

Other warning signs about the economy: the strong dollar is slowing exports and consumer debt is at an all-time high, both problematic as interest rates begin to creep up. In December, the Federal Reserve increased interest rates for the first time in seven years.

The housing market continues to struggle as well. New housing starts haven’t rebounded to pre-recession levels. Last year, a little more than 19,000 new houses were built. From 1990 to 2004, about 48,000 houses were built a year.

Another “troubling part of the economy” is seen in wages that remain flat, Traub said.

Vernaci was more optimistic, pointing to the recovery of the Big Three automakers and a robust, multi-billion dollar aerospace industry, which he said ranks second in the nation and is not hampered by the cyclical nature of the economy. The aerospace industry expects to replace an estimated 36,000 aircraft over the next two decades, and that’s good for Michigan, he said.

The state’s biggest challenge, Vernaci said, is attracting talent. To recruit workers, Traub said companies should be willing to pay higher wages.

The economic forecast breakfast was the first of three forecast events sponsored by the Birmingham Bloomfield Chamber. A March 7 government forecast breakfast features U.S. Sen. Gary Peters, D-Bloomfield Township, and Michigan Lt. Gov. Brian Calley.

A real estate forecast, the final event in the series, will be held on April 5. Speakers are Dan Elsea, president of brokerage services for Real Estate One, and Eric B. Larson, president and CEO of the Larson Realty Group.

» For more on the economic forecast, go to Hometownlife.com.

» Photo via Ford Motor Co.