Increased Auto Sales Boost Michigan Economy

by: Mark J. Perry

The last recession hit the auto industry and the Michigan economy pretty hard. In the summer of 2009, the Michigan economy "hit bottom" as its unemployment rate peaked at 14.1% in August, which was 4.4 percent above the national average that month of 9.7% (see chart above). It was actually a lot worse for Michigan in the early 1980s, when the jobless rate was at 14% or higher for almost two years from late 1981 until the fall of 1983, and reached a high of almost 17% (16.8%) in December 1982 (not much of a "merry" Christmas that year!).

But Michigan has improved a lot recently, thanks to a gradual economic recovery in the U.S. and around the world that has boosted car sales and resulted in some needed job growth in Michigan, which has brought the state unemployment rate down a 2-1/2 year low of 10.2% in April. In fact, the Michigan economy has been recovering much faster than the rest of the country, and its jobless rate is now only 1.2 percent above the national rate of 9%, the narrowest Michigan-U.S. jobless rate gap in seven years, since April 2004 (see chart). In contrast to Michigan "leading the country" with the highest state jobless rate during the recession, Michigan now has a lower jobless rate than five other states (Nevada, California, Rhode Island, Florida and Mississippi).

In the last year, Michigan has added an impressive 30,000 new manufacturing jobs, and 9,000 of those were in automotive manufacturing. Looking forward, we can expect continued improvements for job growth and the Michigan economy, based on hiring projections reported in today's Detroit Free Press:

  • A second shift with about 1,000 new jobs added at Chrysler's Sterling Heights assembly plant in February.
  • Ford has added 50 engineers to develop hybrid and plug-in electric powertrains and is hiring about 170 people to make batteries in Rawsonville and hybrid transmissions in Sterling Heights.
  • Ford executives said in January they plan to hire more than 7,000 hourly and salaried workers over the next two years.
  • Last month, GM said it will hire about 4,000 people in 17 plants, including 2,500 at the Detroit-Hamtramck assembly plant, about 18 jobs at a Bay City powertrain plant and 60 at a Flint engine factory.
  • Suppliers are making more parts at their plants, and, in some instances, adding engineers and product development people locally.
  • Magna Electronics, a division of a Canada-based supplier, is investing $64.8 million on a 35,000-square-foot expansion in Grand Blanc. Eventually Magna will hire about 385 people to make rear-vision cameras.
  • Magna Steyr is expanding a Troy engineering center where it will add about 200 people over the second half of this year.

More evidence that U.S. manufacturing is make a huge comeback and leading the economic recovery.