According to a forecast presented by University of Michigan economists at the University’s Annual Conference on the Economic Outlook on Friday, the Michigan economy could see a small turnaround in 2009 and 2010 after two more years of rising unemployment and job losses in the state’s manufacturing and construction sectors.

University Economics Researcher Joan Crary said the state has made some advances since the economic collapse of 2001 despite the struggles of the auto industry and a climbing employment rate that is the nation’s highest.

“The state’s job market has been running at a pace that could be described as two steps forward, three steps back,” Crary said. “Because we have continued losing ground, there has been an air of pessimism that makes it seem as if there could be no movement but backward. But that’s not all there is to the story. The two steps forward also have something to tell us. What they say is that the potential is there for the forward momentum to break through and eventually, to dominate.”

Although the economists predicted that Michigan will continue to lose salaried jobs in the 2007 and 2008 fiscal years, Crary said they expect to see the number of jobs stabilize in 2009 before swinging toward job growth of about 1 percent in 2010.

They also forecast that unemployment will begin to drop in 2009 after two years of climbing jobless figures. Michigan’s unemployment rate currently stands at about 7.5 percent, up roughly one percentage point from this time two years ago. According to the economists, that figure will rise to about 8.2 percent next year.

Crary said the effect of current Big Three restructuring efforts like the negotiation of new union contracts will play a large role in whether Michigan’s economy will rebound.

“As in past years, the prospects for the state economy over the next few years will be tied in large part to the outcome of the sweeping changes in the domestic auto industry,” Crary said.
According to the report, the state of Michigan has faced a 36 percent decline in transportation equipment manufacturing jobs since 2000, much of which results from the loss of jobs during restructuring.

And it’s not just that Big Three factories and offices are being moved out of Michigan. Crary said the American auto industry’s slipping market share has forced companies to cut costs and eliminate jobs entirely. According to projections by the economists, American cars will make up less than half of cars sold in the United States by 2008.

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