By John Bebow - June 3, 2009
Michigan's economy is better than you think it is.
Really. Even in the face of the the GM and Chrysler bankruptcies that punctuate the most unsettling business cycle in Michigan since the Great Depression.
Brand new economic data released by the federal government this week showed Michigan's total economy declined faster than every state in the union except Florida in 2008.
Still, it's not as bad as you think it is.
The U.S. Bureau of Economic Analysis data on state gross product contains a number of eye-opening signs of diversification and growth in Michigan.
Really.
Michigan's economy achieved its recent peak in 2003, when the total value of all goods and services produced here was $341.1 billion. After adjusting for inflation, how much do you think the state economy has declined since then? 10 percent? 20 percent? 30 percent?
Actually, inflation-adjusted gross state product in Michigan in 2008 was still $326.1 billion — four percent off that peak in 2003.
Sure, our traditional industries took a dive from 2003-2008. Construction was off 40 percent. Manufacturing was down 15 percent.
But other industries have seen impressive growth.
Really.
Examples:
Details by industry…
Are these numbers going to get worse in 2009 because of the breathtaking decline of the auto sector? Absolutely.
Does the constant drumbeat of Motor City decline, echoing daily in the local and national media, accurately reflect the diversity and transformation underway in the Michigan economy? Absolutely not.
7 Comments
I am not surprised by these numbers, but they do show how antequated Michigan's corporate tax structure is, even with the 'NEW' MBT. We are too heavily reliant on revenue from industries that are going away and to light on those that are rising. The way Michigan taxes business, even with the new MBT, is 50 years old.
Mr. Bebow, your comments are interesting and insightful. I'm a proud Michigan native and I'm optimistic that the economy will recover. It remains to be determined if the quality of the jobs created in the service sector will offset the economic value of the jobs lost in the manufacturing sector. We need to change the topic of conversation from "Rust Belt" to "Innovation Belt." I encourage Michigan's citizens and their elected leaders to quell the partisan conflicts and channel their collective energies into nurturing entrepreneurship and promoting economic development. The mission to Transform Michigan will require shared sacrifice and investment to ensure a prosperous future.
My mother always told me, "you dance with the one that brought you." Michigan has danced almost exclusively with the auto industry for too long, only paying lip service to these growing sectors. It will take time for them to catch up with the employment of the automotive sector, but if we are able to adjust our way of thinking, they will. If we don't adjust, they will leave, because they are far more footloose.
We need to change our tax structure that has relied way too long on capital intensive manufacturing, become more creative in our overall approach to both government and economic development, and – somehow – sustain and promote our quality of place while this transition takes place.
Since our beautiful state is an unwilling leader in the perception of national desperation, perhaps we should out-do California and every other state by literally "reinventing the wheel" — and truly consider how best to operate this state, starting over from the ground up.
How best should government services be set up in a "perfect state" which could become Michigan? A future constitutional convention could allow us to re-design what a 21st-century state needs to operate properly and most efficiently. Do we really need 83 sheriffs, and 549 school districts?
These are disruptive ideas, but we are faced with trying times. When better to start all over, and set the national standard of how to run a state right?
It could (and should) happen right here in Michigan.
One very important factor being totally ignored by Detroit and its surround counties including Oakland is: Now that the Automobile industry may have loosed its lock on the transportation industry in this state it is time to develop the fastest and most efficient means of moving potential workers and customers from one end of the metropolitan area to another. In all directions. To start with: Build vehicles that are cost efficient and avoid pollution, hire drivers, and relieve our dependence on the automobile. Also, make our metropolitan area more user friendly and accessible.
I think we should all quit our jobs and start renewable/alternative energy companies. It's the future. Go Governor!
Mark, I agree with your comments totally.
I see a huge problem though.
People generally fear Government contorl and re-organization and favor independance and identity driven self determination of direction.
Thats why its so fragmented now.
Fueling that sentiment, National and state level republicans continue to Strike fear of government and grouping people into the hearts of the common person.
Fear is a weapon and it keeps people divided.
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