The latest quarterly economic survey from Business Leaders for Michigan shows continued optimism about the state economy, although few executives expect higher growth through 2019 and into next year.
Two-thirds of Business Leaders for Michigan’s members say they expect the state economy to remain in “about the same” growth mode over the next six to 12 months, according to results from the groups’ first quarter survey. Just 7.5 percent of respondents expect higher economic growth in Michigan and one-quarter see lower growth ahead.
Business executives offered a more optimistic view when asked about expected investments and job growth in the next six to 12 months. More than half of respondents said they see capital investments occurring at “about the same” level and 37.5 percent project “better/higher” capital spending. Another 10 percent expect “worse/lower” capital investments.
Nearly two-thirds of respondents said they expect employment to remain at about the same level and one-quarter project higher employment. The remaining 10 percent projected lower employment.
As national outlooks project economic growth easing through 2019 and 2020, Business Leaders for Michigan President and CEO Doug Rothwell views the quarterly survey results as showing strong optimism for the state’s economy.
“Michigan’s business leaders remain bullish on their ability to grow jobs and investment, and are anticipating plenty of opportunities on the horizon,” Rothwell said in a statement. “Any uncertainty expressed by the state’s senior executives are grounded in the unknowns surrounding international trade relations.”
Asked about their priorities, business executives indicated that “we must invest while our state economy is still growing — namely, directing at least $2 billion dollars annually to fixing our severely ailing roads,” Rothwell said.
An updated economic outlook the University of Michigan issued this week also expects continued job growth for the state, albeit at a slower rate than in recent years.
U-M economists now project the state economy to add 37,000 jobs in 2019 and 26,000 in 2020, for annual growth rates of 0.8 percent and 0.6 percent, respectively. The projection compares to 1.7 percent average annual growth from 2011 to 2018.
“We judge that the state’s solid job growth last year was helped by above-trend growth in U.S. real GDP, which we see slowing over the forecast period,” U-M economists wrote in their April 5 state outlook. “Local job growth over the next two years is also restrained by layoffs at General Motors and a decline in Detroit Three light vehicle sales. Perhaps the most important factor restraining job growth over the forecast, however, is the tight labor market.”
The outlook predicts statewide unemployment of 3.9 percent each of the next two years.
Nationally, U-M’s latest U.S. economic outlook issued in mid March predicted 2.4 percent real GDP growth for all of 2019, with a growth rate of 2 percent in the fourth quarter alone. The U.S. economy recorded 2.9 percent growth in Real GDP for 2018. U-M economists predicts further easing of U.S. economic growth into 2020 with a forecast of 1.8 percent Real GDP growth.
From light vehicle sales of 17.2 million in 2018, sales should ease to 16.9 million units in North America for 2019 and 16.8 million in 2020, according to the U-M outlook.
In Business Leaders for Michigan’s first quarter survey, eight of 10 respondents expect about the same rate of U.S. economic growth over the next six to 12 months, and just 2.5 percent predict lower growth. Another 17.5 percent expect worse or lower U.S. economic growth through early 2020.