Business leaders are pessimistic
Unclear future of federal trade policies is main cause for concern.
A recent survey shows nearly all the state’s top business leaders expect the economy to stay the same or worsen in the next six to 12 months.
Only 3.7 percent of leaders expect Michigan’s economy to get better next year, a decrease from 74 percent at the start of 2018, according to surveys by Business Leaders for Michigan, a business roundtable that includes top leadership responsible for driving nearly one-third of the state’s economy.
At the start of this year, no leaders surveyed expected the state economy to worsen. Now, 32 percent of them expect a drop in some way.
Despite decreased confidence, about 43 percent of those same leaders expect to increase their capital investments and 40 percent expect to increase employee numbers. Those numbers have decreased since earlier this year, however, and 11 percent and 19 percent, respectively, expect weakness in those areas.
No one can see the future through a crystal ball, though, said Anna Heaton, BLM vice president of marketing and communications.
She said those negative projections reflect business leaders’ uncertainty mostly regarding the federal level, such as the unclear future of trade policies that have caused waves in the stock market.
Doug Rothwell, BLM president and CEO, also credits this uncertainty to rising interest rates, rising commodity prices and slower growth overseas.
Heaton said because Michigan continues to do well in many areas, Michigan leaders still are willing to invest into their companies.
Michigan’s population rose 0.2 percent to 9,995,915 people last year, according to census data released this month, and the unemployment rate still is at a record low.
Though economists predict another recession as soon as late next year, Heaton said the state is in a much better position than it was when the last one hit a decade ago, which eases some leaders’ worries.
Many of the state’s economists and economic developers tout Michigan’s diversified economy that relies on many industries, rather than just automotive. Manufacturing, agriculture, tech and other areas all have grown since then.
And Michigan has $1 billion in its rainy day fund, meant to keep the state’s budget from falling into a deficit once there is a recession.
Numbers don’t lie, though — more than 60 percent of leaders expect the Michigan and U.S. economies to stay about the same in the next year, with slightly worse outlooks for Michigan versus the country, which shows confidence in growth is slipping.
Once that downturn does hit, Heaton said companies likely will tighten those investment numbers a bit.
“It remains to be seen,” she said.