Economy
Did You Know?
Michigan has the worst economic growth record of any state since 1990. Since 2002, its real GDP has decreased each year – even while the rest of the country was in an economic expansion.
Job-seekers are leaving the state. Michigan has the third highest rate of out-migration, after New York and Louisiana.
Since 2000, Michigan has lost 12% of its private sector jobs, a total of 484,000 jobs.
Michigan’s 15.2% unemployment rate is highest in the nation, well above the national average of 10.2% and 2.8% above the next worst state. From June 2008 to June 2009 Michigan lost the greatest number of jobs of any state, except California and Florida: 337,600.
Had Michigan grown at the 50-state average since 1990, its economy would be $88.2 billion larger. That’s an extra $8,815 per person.
A Lengthy Recession
How bad is it?
From November 2001 through the end of 2007, the national economy was in an expansion. Michigan was the only state that saw important economic indicators shrink as the rest of country grew.
The best way to measure a state’s prosperity is to calculate the value of all goods and services produced within it. This is measured for states the same way it is for the national economy, in Gross Domestic Product, or GDP.
A recession occurs when an economy’s total production actually declines in real terms. This has been consistently the case in Michigan this decade, as each year fewer goods are produced, less business is conducted, and fewer people have jobs.
As the chart shows, Michigan’s economy has been shrinking in real terms, even when the rest of the country was enjoying robust economic growth, even taking into account 2008, the first year of the national recession. During this period, Michigan’s economy shrank 6.0%, while the national economy grew 17.1%. Also, all other states in the region dramatically outperformed Michigan.
Another way to measure the economic situation in a state is to look at population growth. A state’s population usually grows relative to other states when it provides a welcoming environment for people to live, work, and start businesses.
Michigan was once a very popular state but is currently lagging far behind most of its neighbo
rs, in a region that itself lags substantially behind the national average. Some factors that affect population growth, such as climate and geographic features, lie beyond the control of individuals and lawmakers, but lawmakers are responsible for taxes, government spending, and the intrusiveness of government regulation, all of which have a major impact on where people choose to live.
One of the most striking examples of Michigan’s dramatic economic decline is its ranking among the fifty states in personal income per person. According to the Bureau of Economic Analysis, Michigan’s high point was 1965, when it ranked number nine. As recently as 2000, we ranked 17th. In 2008, Michigan dropped to number 34 and is estimated to be 41st for 2009. This is a stunning change for a state that was once the machine shop of the nation.
