DETROIT, Mich., October 12, 2010 – Business Leaders for Michigan’s third quarter survey of 75 of Michigan’s leading executives’ forecasts a deferral of economic recovery into late 2011.
The significant loss of economic momentum over the past two quarters of 2010 is due to a myriad of factors including significant uncertainty about the U.S. market recovery, compounded by government debt and the cost of new regulations, as well as the European market crisis.
Executives of Michigan’s largest employers continue to forecast that Michigan will lag the nation’s economic performance, but they predict hiring will improve modestly over the next six months. The executives represent a cross-section of industries across Michigan and are in a unique position to assess the direction of the economy.
“The survey gives policymakers direct and valuable insight into what Michigan’s economy will look like in the months ahead, and it’s basically more of the same,” said Doug Rothwell, President & CEO of Business Leaders for Michigan. “True national economic recovery is still at least 12 to 18 months down the road, and Michigan will lag that recovery. We see no evidence that the decade-long trend of Michigan getting smaller and poorer relative to other states will reverse any time soon.”
Survey highlights include:
- 90 percent believe Michigan’s economy will remain the same or deteriorate over the next 6 months, up from 82 percent in the 2nd quarter. Optimism about the U.S. recovery is also decreasing.
- 49 percent think Michigan’s economy will get better 18 months from now, an improvement of 8 percent from Business Leaders’ 2nd quarter survey. This contrasts sharply with 68 percent who believe the US economy will be better 18 months from now.
Approximately 41 percent forecast increased hiring in Michigan in the next 6 months. However, the linear trend-line projection for future Michigan employment gains, while positive, is only marginally better than one year ago. The forecast indicates flat or lower capital investment in Michigan during the same period. Increased hiring is largely attributable to low inventory levels.
- Most Michigan companies expect to perform better than their sector competitors
According to Rothwell, “While short-term hiring prospects look better in Michigan, they are at modest levels. Many of our executives pointed to the November elections as being critical for electing leaders who embrace the need for strong economic growth policies like that outlined in the Michigan Turnaround Plan.”
Business Leaders for Michigan initiated the survey of its member chief executives in July 2009. Quarterly Economic Outlook Reports are available at businessleadersformichigan.com/research-and-reports or businessleadersformichigan.com/media-resource-center/press-releases.