Here’s another example of how the U.S. economy grows and contracts unevenly across states. The chart below from the Detroit Free Press shows how Michigan’s economy has effectively been in recession for six years.
Michigan’s GDP contracted in 2004, 2006, 2007, 2008, and 2009 (2009 is not shown in the chart).
There was a tiny bit of growth in 2005, but if you look at Michigan’s economy from 2003 to 2009, the economy has shrunk over this period. Thus the nation has effectively been in recession for six years. 2005 was a head-fake.
This Michigan GDP data explains one reason why different Americans have wildly different views on the economy, and feel it’s ridiculous when others contradict them.
One of the greatest errors one can make is to judge the state of the U.S. economy based on your immediate surroundings. The U.S. is an enormous and diverse country. Someone sitting in Michigan over the last few years had a very clear view of their local economy, but a horribly distorted view of the national economy.
Yet even for Michigan, things could now be changing.
In a report released Monday, Dana Johnson, Comerica Bank’s chief economist and one of the state’s most prominent economic experts, forecast that the production of goods and services in Michigan will grow by 3% or more this year, leading to a modest increase in jobs. The last time the state enjoyed positive economic growth was in 2005.
“That’s a wonderful change from the last five or six years,” Johnson said. “Michigan is going to perform more like the rest of the country.”
Johnson predicts the state will return to positive job growth this year. Though he doesn’t have any numbers to share, he describes it as a “small recouping of the terrible losses” that have affected the state, which has shed nearly a million jobs since 2000.”Looking ahead, Michigan should do considerably better for a while,” Johnson wrote in his latest Michigan Economic Brief, released Monday. “The economic recovery will work in Michigan’s favour, as it has in the past. And the adverse structural trends are not likely to be as bad if the auto manufacturing sector is becoming more competitive.”
Interestingly, Mr Johnson doesn’t expect auto manufacturing to have much to do jobs growth. Auto manufacturing related jobs account for just 3% of Michigan jobs these days, compared to 7% in 2000. Thus it’s a new Michigan economy that is, hopefully, emerging from a protracted downturn. Given the multiple years of economic contraction, it could take a few years of growth for Michigan to return to its 2003 level of input.
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