Detroit economic outlook remains optimistic, UM report says
Posted By: The Detroit News on February 2, 2024. For more information, please click here to read the source article.
Despite elevated interest rates posing challenges for Detroit’s mortgage and auto manufacturing industries, the city is expected to see economic growth pick up later this year and continue at a steady pace for the next few years, University of Michigan experts said in a report released Friday.
A February executive summary update to the Detroit Economic Outlook for 2023-28 notes that Detroit’s economic recovery from the COVID-19 pandemic continues to progress despite factors including job losses in the financial services sector, a series of strikes last fall and the continuance of remote work.
“The economic data for Detroit have been telling a mixed story recently,” UM economists wrote.
The report notes that from mid-2022 through the first quarter of 2023, hourly and salaried jobs inside the city’s boundaries declined by 3,300.
“While our forecast suggests that Detroit payroll employment had recovered much of that loss by the end of 2023, we do not expect the city to exceed its high from 2022 until mid-2024,” economists wrote. “On the other hand, the count of employed Detroit residents rose at a healthy pace through most of 2023, reaching 1.5 percent above its pre-pandemic level in September.”
Experts say they expect payroll jobs to increase by 3,000 this year after 600 net job losses last year. Job gains are expected to accelerate to 3,800 in 2025 and then stabilize to an average 1,700 additional jobs each year through 2028.
Detroit’s jobless rate is expected to average 8.2% and drop down to 7.1% by 2028, when the city is expected to reach its highest labor force level since 2013. The report notes that between April and November last year, the city’s labor force gained back more than 15,000 people, well above pre-pandemic levels.
“Slower national economic growth in 2024 poses risks to the local economy, but we expect Detroit’s economy to display encouraging resilience in the face of a challenging external environment,” economists said. “The possibility of a national and statewide recession in 2024, however, remains a risk to our outlook.”
For employed Detroit residents, average pay is expected to increase 42% from 2019 to $50,000 by 2028. However, experts say inflation will reduce a significant majority of those gains.
“Still, Detroit residents’ total real income per capita grows by a cumulative 7.7 percent from 2023 to 2028, which would be welcome progress,” economists said.
Blue-collar jobs and lower-educational attainment services, which include retail and hospitality jobs, are expected to exceed pre-pandemic employment levels by the end of 2028. Jobs in higher-ed attainment service industries, such as health care and finance, are expected to be 2.5% below pre-pandemic employment levels, weighed down by a slow recovery in financial services.
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