Though an estimated 35,000 jobs will be cut in Michigan this year, University economists are promising a brighter employment outlook as early as 2004.
In their annual forecast of the Michigan economy, economists George Fulton, Joan Crary and Saul Hymans predicted the state will regain 28,000 jobs in 2003 and then more than triple next year’s gains with 88,000 jobs in 2004.
“After slogging through two years of employment declines, the Michigan economy appears headed toward a year of transition in 2003, as near-term backsliding is followed by gradual improvement,” Fulton said in his forecast on Friday. “A year from now, the outlook should be much brighter with widespread robust gains projected for 2004.”
Crary said the present unemployment rate in Michigan – which has hit a 10-year high at 6.1 percent – will continue to rise slightly in 2003 because the growth in labor force will exceed job gains.
“We will be gaining jobs but not fast enough to keep up with labor force growth,” she said. “Subsequently, when the national economy picks up the state economy follows along.”
Crary attributed the growth in labor force to several variable economic factors.
“Labor force growth is a combination of population growth and people’s judgments of how likely they are to find a job when they go looking,” she said.
Students looking for summer jobs, for example, may get discouraged if they hear it’s a really awful year and not bother, she added.
The forecast also predicted a corresponding increase in real disposable income and interest rates.
“You have more people working and they’re working longer hours,” Crary said. “Both of those things combine for wage growth.
“Interest rates will be going up mostly in 2004, contributing to income growth (because) people put savings in things that earn interest,” she said.
Fulton summed up the economic forecast for Michigan on an optimistic note.
“The broader the perspective, the more encouraging the story.
“In all, the pessimistic view of our outlook is that 2002 turns out to be another year of net job loss for Michigan, followed by a year of only modest job growth,” he said. “The optimistic view is that the job loss during 2002 is only a third of what we saw during 2001, to be followed by a significant recovery that creates jobs in 2004 at a pace as vigorous as the rate prior to the current downturn.”