1. Donald R. Grimes University of Michigan The Michigan Economic Outlook Michigan Community College Association Summer Workshop Traverse City, Michigan July 22, 2011

2. U.S. Outlook

3. Growth in U.S. GDP 2009 – 13 – 3% – 2% – 1% 0% 1% 2% 3% 4% 20102012201120132009 – 2.6 2.9 3.1 2.5 3.1

4. U.S. GDP Growth, 1930 – 2010 and Forecast, 2011 – 13 – 15% – 10% – 5% 0% 5% 10% 15% 20% ’30’35’40’45’50’55’60’65’70’75’80’85’90’95’00’05’13’10 WW II1930sForecast Post- WW II Average Growth Rate 1947–2010 = 3.3% ’09 ’01 ’91 ’82 ’74 – ’75 ’58’54’49 ’38 ’36 ’32

5. U.S. Unemployment Rate 2009 – 13 0% 2% 4% 6% 8% 10% 12% 20102012201120132009 9.3 9.6 9.0 8.7 8.2

6. U.S. Unemployment Rate, 1930 –2010 and Forecast, 2011 – 13 0% 4% 8% 12% 16% 20% 24% 28% 32% WW II1930s Forecast Post- WW II Average Unemployment Rate 1947–2009 = 5.6% ’10 ’03 ’92 ’82 ’75 ’58 ’54 ’49 ’37 ’33 ’30’35’40’45’50’55’60’65’70’75’80’85’90’95’00’05’13’10

7. U.S. Light Vehicle Sales, 1990 – 2013 0 5 10 15 20 '90'92'94'96'98'00'02'04'06'08'10'12 '91'93'95'97'99'01'03'05'07'09'11'13 Millions

8. U.S. Light Vehicle Sales Total vs. Detroit Three, 2009 – 13 0 2 4 6 8 10 12 14 16 18 Total 20092010201120132012 14.8 12.9 11.5 10.4 Detroit Three 4.5 5.1 5.9 6.7 6.9 15.3 Millions of Units 45.0 43.3 44.2 45.7 45.0 Annual % Detroit Three market share

9. Michigan Outlook

10. Employment Growth, Michigan and National 1973 – 2010 '75’79’83’87’91’95’99’03 ’ 07 ’73’77’81’85’89’93’97’01’05 ’ 10 – 8% – 6% – 4% – 2% 0% 2% 4% 6% National Employment Michigan Employment

11. Private Employment Growth by Educational Attainment Michigan vs. United States, 2001 – 09 75 80 85 90 95 100 105 110 200120022003200420052006200720082009 Index (2001 = 100) High ed Michigan: Low ed United States: High ed Low ed

12. Michigan Total Jobs and Detroit Three Sales of Light Vehicles 1991 – 2010 3,500 4,000 4,500 5,000 3 4 5 6 7 8 9 10 11 12 ’92’94’96’98’00’02’04’06’08’10 ’91’93’95’97’99’01’03’05’07’09 Total Jobs (Thousands) Sales in Millions of Units Total jobs Sales

13. Change in Michigan Wage and Salary Employment, 2009 – 13 – 350,000 – 300,000 – 250,000 – 200,000 – 150,000 – 100,000 – 50,000 0 50,000 100,000 20092010201120122013 Change in Employment – 289,900 – 10,900 67,300 61,500 53,100

14. Change in Michigan Wage and Salary Employment, 1940 – 2010 and Forecast, 2011 – 13 – 400 – 300 – 200 – 100 0 100 200 300 ForecastWW II Thousands of Jobs Average Change 1971–2000 = 58,000 jobs ’40’45’50’55’60’65’70’75’80’85’90’95’00’05’10’13

15. 41234 ’082009201020112013 Michigan Wage and Salary Employment Growth Annual Rate (%) – 14 – 12 – 10 – 8– 8 – 6– 6 – 4– 4 – 2– 2 0 2 4 2012 1234123412341234 – 3.9 – 6.01.01.81.6 – 167.7 – 244.637.768.962.2 4th Quarter to 4th Quarter Growth Rate (%) 4th Quarter to 4th Quarter Change (Thousands) 1.6 62.2 6 ActualForecast – 12.8 0.1 – 6.7 0.7 4.7 1.6 0.4 0.9 1.4

16. Michigan Wage and Salary Employment First Quarter of 2000 to Fourth Quarter of 2013 3,800 3,900 4,000 4,100 4,200 4,300 4,400 4,500 4,600 4,700 4,800 ’00’01’02’03’04’05’06’07’08’09’10’11’12’13 Forecast Thousands of jobs  Peak ’00q2  Trough ’09q3  ’08q4 ’11q1  ’13q4 

17. WHERE’S THE JOB GROWTH?

18. MOST RAPIDLY GROWING SECTORS Manufacturing  Includes the auto industry Professional and business services  Scientific research and development  Management and technical consulting  Computer systems design Health care  Physicians  Home health care Wholesale trade Leisure and hospitality

19. DECLINING SECTORS Government Information (Traditional delivery systems) Natural resources, mining

20. 0% 2% 4% 6% 8% 10% 12% 14% 16% 20092010201120122013 13.3 12.5 10.0 9.4 9.0 Michigan Unemployment Rate 2009 – 13 13.911.49.79.38.8 4th Quarter Unemployment Rate

21. Michigan Unemployment Rate, 1970 – 2010 and Forecast, 2011 – 13 2% 4% 6% 8% 10% 12% 14% 16% ’70’75’80’85’90’95’00’05’13 Forecast Average Unemployment Rate 1970 –2008 = 7.9% ’10

22. Inflation Rate, Detroit CPI 2009 – 13 20102012201120132009 – 0.7 0.8 2.9 2.0 1.6 – 2% – 1% 0% 1% 2% 4% 3%

23. 20092010 – 3.1 20112012 Michigan Personal Income Growth (Current $), 2009 – 13 2013 2.8 4.4 3.0 5.2 – 4% – 3% – 2% – 1% 0% 1% 2% 3% 4% 5% 6%

24. Michigan Real Disposable Income Growth (1982– 84 $), 2009 – 13 2009 1.9 2010 – 0.2 20112013 2012 2.0 0.4 1.7 – 1% 0% 1% 2% 3%

25. RSQE Forecast – State Revenues by Fiscal Year (Millions of dollars) ActualForecast 2009201020112012 GFGP revenue (% change) 6,785 ( – 7.9) 7,514 (10.7) 7,724 (2.8) 7,366 ( – 21.3) Earmarked state SAF revenue (% change) 10,817 ( – 1.0) 11,118 (2.8) 11,397 (2.5) 10,922 ( – 5.1)

26. 0% 5% 10% 15% 20% 25% 30% 35% 40% 0 to 2425 to 4445 to 6465 plus Population Distribution by Age Group Michigan, 2005 and 2035 34.6 29.3 27.5 24.2 25.5 23.1 20052035

27. 0% 5% 10% 15% 20% 25% 30% 35% 40% 0 to 2425 to 4445 to 6465 plus Population Distribution by Age Group Michigan, 2005 and 2035 12.4 23.4 20052035

28. We are getting much older. By 2035, more than 23 percent of Michigan’s residents will be 65 or older. ● Compare this with the situation in Florida today. In the state known as “God’s waiting room,” 17 percent of the residents are 65 or older. ●

29. Implications ● Fewer traditional-aged college students ● More older workers ● Labor shortages ● Skill mismatch ● Community leadership

30. U NIVERSITY OF M ICHIGAN www.rsqe.econ.lsa.umich.edu www.irlee.umich.edu/clmr