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 Alyssa Tracey of the Michigan Economic Development Corporation joins Paul Traub of the Federal Reserve Bank Chicago/Detroit branch for questions from the Birmingham Bloomfield Chamber of Commerce membership Jan. 11.

Alyssa Tracey of the Michigan Economic Development Corporation joins Paul Traub of the Federal Reserve Bank Chicago/Detroit branch for questions from the Birmingham Bloomfield Chamber of Commerce membership Jan. 11.

Photo provided by Doug Ashley, courtesy of the Birmingham Bloomfield Chamber of Commerce

Economists look at the health of Michigan and U.S. coffers

By: Tiffany Esshaki | Birmingham - Bloomfield Eagle | Published January 14, 2019


BIRMINGHAM — When it comes to how Michigan and our nation’s economy will fare in 2019, there’s plenty of data to suggest that we’ll continue to have growth above trend.

But if we’ve learned anything from the past few years, it would be to expect the unexpected.

“The economy is in turmoil. There’s hard data we’ve been able to follow — though with the government shutdown it’ll be harder to get the hard data — that says the economy is doing well,” said Paul Traub, senior business economist for the Federal Reserve Bank’s Chicago/Detroit branch. “And then there’s soft data, financial market information, that’s kind of saying maybe it’s not doing so well.”

Traub’s ambiguous analysis kicked off the annual Economic Forecast Jan. 11, hosted by the Birmingham Bloomfield Chamber of Commerce at the Bloomfield Open Hunt Club. The chamber invited members and community professionals to breakfast and networking, highlighted by remarks from economic experts who shared opinions on what the business world can expect for Michigan’s financial state in 2019.

Traub was joined by Alyssa Tracey, business development manager for retention and growth at the Michigan Economic Development Corp. She honed in on what Traub’s national analysis could mean for Michigan, and what the MEDC is doing to promote growth in several sectors, including automotive, medical and technology.

Tariffs and tech and interest rates — oh my!
After his introduction, Traub went into detail on why it’s tough to determine where the 2019 economy will take the United States, sorting through hard data, which shows a strong end to 2018 and optimistic consumer sentiment, according to a study from the University of Michigan, but also anxiety on Wall Street stemming from “instability in Washington, D.C.”

That instability, he explained, comes by way of trade tariffs, a shaky future for the North American Free Trade Agreement, rising debt and other factors. But that’s countered, he explained, by lower commodity prices and a good climate for businesses.

There’s still so much work to be done, though, according to Traub. Interest rates need to return to a higher, more sustainable level; Washington needs to get a handle on debt so younger tax contributors aren’t just servicing debt; and even though efficiency in business might seem great, it can cut into employment health.

“We’ve cut investment in human capital to the quick, and we’re going to pay for that. We need to start thinking about that if we really want this country to grow again,” Traub said. “And it’s not that the cost of education is going up — my wife is a college professor, and I don’t see her (income) going up — it’s who’s paying for it.”

No need to tell that to an autoworker, with news of layoffs at General Motors striking fear into the Motor City. But outsourcing isn’t entirely to blame.

“A lot of jobs that were going to be lost were going to be lost anyway, because we’ve been increasing productivity. That’s what businesses try to do. How can we make it better and cheaper?” Traub explained. “Those auto jobs weren’t shipped away as much as they were automated.”

None of that particularly worries Traub, though. It’s the yield curve that as of late has been hinting at the possibility of another recession. But unlike the recession of the ’90s, caused by the savings and loan crisis, the dot-com crash of 2001 and the subprime loan crisis of 2008, it’s hard to say what might cause the next economic burst. How bad that dive might be, in the event it occurs, is up for debate.

“There’s at least a dozen things that are bothering me. I could pin instability in Washington for a lot of them,” Traub said.

Birmingham-Bloomfield shines in community vitality
While the rest of the country is making slow strides forward and up, Michigan is arguably working at a slightly quicker pace, according to Tracey.

“In the past eight years, there’s been dramatic progress,” she said. “Some of the key points to this economic resurgence include lower taxes and improved collaboration among units of government that resulted in attracting and maintaining private investment.”

She went on to show the crowd how Michigan is currently leading the nation in manufacturing jobs, with about 138,700 new manufacturing jobs to boast in the past eight years.

Michigan also takes the top spot in the Midwest for private sector work — that puts the state at seventh in the country — with just over half a million new jobs. Oh, and Michigan is No. 3 in the nation for tech sector jobs. There’s been a 42 percent increase in startups over the past five years here.

“We’re not only a national, but a world leader in development and testing of autonomous vehicle technologies,” sTracey said.

At the MEDC, the goal is to keep that momentum pushing forward by acting as a resource for existing and future businesses and industries while highlighting for potential companies why Michigan is a great place to be to make money. From rural areas to urban hubs, or from “Marquette to Monroe,” as Tracey said, there’s a campaign to boost awareness for every state resource — tech talent, agricultural, tourism, etc.

And Oakland County is doing even better, she said, with a very low level of occupancy vacancies for business sites. The Eagle’s coverage area is especially attractive for businesses and families alike. Communities can support that success by making sure municipalities create welcoming development practices and, in more rural areas, equipping available properties with utilities necessary to operate.

“A strong, vital community is a place where people want to live, and investors notice this and see us as a great place to locate and expand,” Tracey said. “People with a range of talents want to move into interesting and vital communities. ... I live right off Woodward, between 13 and 14 (Mile roads), and I don’t think there’s a more prime example than right here in the Birmingham-Bloomfield area as the intersection of place and talent. This is where people want to live, and this is where people want to work.”

Guests of the forecast walked away with an optimistic outlook for the state’s new year, but perhaps some sweaty palms from Traub’s take on the precarious national economic situation.

“My takeaway from the presentations is Michigan is continuing its economic recovery, and that overall economic foundations are strong,” chamber President Joe Bauman stated in an email.

“Unfortunately, with so much uncertainty in Washington right now with tariffs, trade wars and the partial government shutdown dominating the news cycles, the markets are not doing as well as they should be, and the average person is starting to hesitate in making major purchases they otherwise would be making.”