Moreso than ever, Michigan’s economic future is “inextricably” tied to the health and safety of its citizens, making issues such as coronavirus-related relief funding as well as widespread distribution and use of vaccines the top concern for 2021 and beyond, according to researchers and economic experts.
How Michigan recovers — as well as how quickly — was the topic of the Detroit Economic Club’s January meeting, which included the results of the 9th annual Michigan Economic Outlook Survey. The survey, which was conducted by Ann Arbor-based Baker Strategy Group, highlights the frustrations and concerns of business owners, industry groups and economic clubs around the state and beyond.
With the coronavirus, there is no separating Michigan’s economic outlook and health concerns from businesses and residents alike, panelists on the Zoom-based webinar held Tuesday agreed. Michigan cannot return to “normal” until public health is under control and people feel confident going to work, out to dinner and doing everyday activities in this new pandemic environment, speakers said.
“Public health and economy are inextricably linked,” said event speaker and Michigan Treasurer Rachael Eubanks. “People are ready to get out (and) once we can get back to ‘normal’ and get our arms around this crisis, I think there’s going to be tremendous demand.”
That demand will come in the form of additional desire from Michigan residents to travel, eat out, go to entertainment venues and the like, Eubanks said. However, there are real and long-lasting issues for Michigan and the nation to contend with as a result of the coronavirus, especially in terms of women leaving the workforce because of personal issues, such as a need to have a parent at home to handle childcare and homeschooling.
David Baker, Managing Partner of the Baker Strategy Group, presented the economic-outlook survey results, which showed that Michigan will have some ground to make up in 2021 and beyond because of coronavirus-related concerns.
Baker noted that Michigan’s population is just under 10 million, with a civilian labor force of 4.9 million, 4.6 million of whom are employed, giving Michigan a 6.9% unemployment rate. Michigan’s GDP is approximately $525 billion, putting per capita GDP at around $52,500. The state’s workforce is about 79% business, 9% nonprofit, and 12% government.
The survey was done about one week after Election Day “to allow some of the political dust to settle,” Baker said. Elections were held on Nov. 3, so the survey ran Nov. 10 to Dec. 18.
Baker said Michigan’s 12-month organizational outlook “dropped dramatically this year,” falling 8 points from 80 in 2020 to 72 in 2021. However, he noted, Michigan continues to run 2-4 points above the aggregate.
“The primary problem, of course, is the impact of the pandemic and the efforts to control it,” Baker said. Sixty‐seven percent of Michigan respondents say the coronavirus had an extremely negative or somewhat negative impact on their business. However, there were also 16% who said it had an extremely positive or somewhat positive impact on their business. The difference in the 12-month outlook score for these groups is striking: 66 for negative and 87 for positive.
Michigan respondents also say they are much less likely to recommend Michigan as a great place to grow a business. Michigan dropped precipitously 9 points, despite the rest of the country maintaining a steady 74, Baker said. “Similarly, the score for Michigan as a business-friendly state also slid 8 points from 69 to 61, even as the aggregate ticked up slightly from 64 to 66,” Baker added.
Survey participants also said they feel Michigan’s K-12 schools are underperforming against the rest of the nation and “entrepreneurial resources and talent are low, but are slightly above the aggregate, while infrastructure, which includes the roads, is low and also underperforms against the aggregate.” He also noted that public transportation is low across the board.