01 April 2009

2010 Could Be Recovery Year For Michigan Economy

Story Posted at Detroit Free Press

Comerica Bank’s chief economist has some good news for long-suffering Michiganders: better days could be coming next year.

Dana Johnson predicts that the state economy’s rate of decline is going to start slowing soon. “With some luck, 2010 will be the first year of recovery,” he wrote in his new economic report about Michigan that was released this morning.

Johnson estimates that Michigan’s real gross domestic product, or the total value of all goods and services produced in the state adjusted for inflation, will drop by 5% this year. That means 2009 will be the sixth consecutive year of recession for Michigan.

If that prediction comes true, the state’s real GDP will have declined by almost 10% in the last six years, which Johnson said could qualify as a depression.

“The Michigan economy has probably just gone through what will end up being the most abrupt part of the contraction that began back in 2004,” Johnson wrote. “The near catastrophic strains in the credit markets that emerged this past September and October put the national and the state economy into free fall.”

Johnson warned of more short-term economic pain for Michigan due to the ongoing restructuring of the auto industry. But he expects the job losses, pay cuts and plant closures to start tapering off next year. And he anticipates that nationally, car sales should improve in the second half of this year “as credit becomes cheaper and more available and job losses slow.”

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