Forecast indicates state economy will bottom out in 2011
Business Leaders for Michigan’s first quarter survey of 70 of Michigan’s most prominent executives indicates that the Michigan economy should bottom-out during early 2011 — the same conclusion reached in the fourth quarter survey. However, the executives still forecast that Michigan will lag the nation’s economic performance over the next 18 months and, as a result, predict modest hiring gains. The executives represent a cross-section of industries across Michigan and are in a unique position to assess the direction of the economy.
Highlights of the survey include:
- Approximately 20 percent forecast increased hiring in Michigan in the next 6 months. More than 70 percent forecast flat or lower capital investment in Michigan during the same period. The hiring forecast is lower than the last quarter, while the capital investment forecast is a slight improvement.
- 75 percent believe Michigan’s economy will be the same or deteriorate over the next six months, about a 15 percent improvement over the fourth quarter survey. This is in contrast to nearly 100 percent thinking the U.S. economy will be the same or get better.
- 55 percent think Michigan’s economy will get better 18 months from now, an improvement from the fourth quarter survey results. However, most still believe the U.S. economy will be stronger than Michigan’s at this time.
- Most Michigan companies expect to perform better than their sector competitors.
The survey should be a valuable tool for policy makers because it gives them a real-time snapshot of business trends and forecasts. As previous Business Leaders for Michigan surveys predicted, the results show that the Michigan economy won’t bottom out until 2011. Some modest hiring will begin in the next six months, but Michigan’s economic performance will continue to lag the U.S. for at least the next 18 months. This means we will continue to get smaller and poorer relative to other states — a trend that must be reversed. We continue to believe the only solution is to adopt holistic, fundamental reforms that address spending, taxes and investments such as those outlined in the Michigan Turnaround Plan.
Doug Rothwell is president and CEO of Business Leaders for Michigan. The organization is composed exclusively of the chairpersons, chief executives or most senior executives of Michigan's largest companies and universities. Its work is defined by the Michigan Turnaround Plan. Visit www.michiganturnaroundplan.com for more information.