2020 economic growth expected for Michigan

Jan 8, 2020

Michigan State University’s Center for Economic Analysis sees further growth in the Michigan economy in 2020. This comes from the MSU Economic Forecast Model that tracks and projects the economies of the state of Michigan and the metropolitan areas of Detroit-Warren-Dearborn and Lansing-East Lansing. 


The model forecasts employment and wages by industry, economic output and total personal incomes based on economic conditions and projections at the national and regional levels.

On multiple occasions in this past year, it looked like a recession was just on the horizon. Leading indicators that have proved to be good predictors of a recession consistently triggered recessionary concerns. But many of those old predictors just don’t seem to work in this information-driven economy. The one predictor that trumps all – growth in gross domestic product – continues to point to further growth.

Regardless, parts of the economy are not doing so well. Manufacturing, in particular, had a rough year, leaving many to claim we are in the midst of a manufacturing recession. However, the national data suggest that while manufacturing activity has weakened, it is not in decline.

Trade relations were in the news throughout 2019. It’s hard to keep track, but the U.S. has imposed 10% to 25% tariffs on about $524 billion of imported goods from a slew of countries and commodities. (The U.S. imports about $3.1 billion annually.) It appears that the U.S. tariffs have not led to their intended effects of reducing imports and advancing domestic production. Rather, since the first quarter of 2017, imports have increased almost 4% over exports, exacerbating the long-term trade imbalance.

Consumers remain the driving force of this economy. Consumer expenditures make up about two-thirds of the overall economy and consumers remain poised to spend. Consumer debt remains stable and confidence remains high – giving consumers greater reign on spending. First indications of the holiday spending reinforce this conjecture.

Threats to the national economy abound from inside and outside the U.S. China’s explosive economic growth continues its slow ebb, though it remains robust compared to the U.S. The International Monetary Fund has reduced global outlook projections twice this year and projects the European Union to grow at its slowest rate since 2013. Of the EU countries, Germany’s economy, steeped in manufacturing, has lagged the rest of the EU. However, recent projections are for a modest boost, tempered by slowing global growth – but growth, nonetheless.

While 2019 is projected to tack on 2.2 million jobs nationally, the researchers predict 2020 will only add on 1.44 million new jobs. Manufacturing sectors are expected to shed jobs and retail sectors are expected to remain flat in light of productivity gains that allow more to be done with less workers. Other service sector jobs are expected to continue to grow at a stable rate, just south of their long-term trends.

As the only comprehensive state and regional economic forecast estimates that are accessible without a subscription, the MSU Economic Forecast Model is an important resource for businesses and residents wanting to know where the economy is going.

The full forecast details and numbers can be found on the MSU Center for Economic Analysis website at www.cea.msu.edu.

Layne Cameron wrote this report.

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