State of Michigan
2024 Economic Outlook
Updated on 09/27/2023
Michigan 2024 Economic Outlook
While our forecast for Michigan does not anticipate recession, the forecast is for tepid growth through 2024. We project 2023 employment will grow at a respectable pace of 2.5 percent, year over year, closing at about 4.47 million jobs based on employer’s reports. The pace of growth will likely slow through 2024 as the central bank’s rate increases work their way through the economy, reflecting in a projected 1.9 percent employment growth in 2024. This gradual tapering of economic growth is also evident in our Gross State Product (GSP). GSP is also called gross output and is the broadest measure of economic activity at the state and county levels. While 2023 projections of nominal GSP is 5.2 percent growth over 2022, in inflation-adjusted terms, Michigan’s GSP is expected to decline by 1.1% in 2023. That is, the dollar value of goods produced in Michigan is not expected to keep pace with inflation for 2023. Alternatively, we anticipate that nominal GSP growth will taper in 2024 to 4.0 percent growth year over year. With inflation expected to hover around 2.2 percent, real GSP is expected to grow modestly in 2024 by 0.5 percent.
Let’s step back and take a closer look at what makes up these projections. Total employment growth is the culmination of the employment projections of all the underlying industry employment. We project each one of these individually for the state and for the metropolitan areas. While the underlying details can be reviewed in the Michigan Employment Table, we will cover some notable sectors here.
Goods producing employment is made up of manufacturing, mining and construction segments and makes up only about 18.4 percent of Michigan’s non-agricultural employment. Yet, it is set to lead employment growth over the foreseeable future. While service providing sectors target 2.2 percent growth in 2023, goods producing sectors target 3.4 percent growth. Construction and Mining & Logging segments lead in growth in 2023, while manufacturing jobs, driven by the automobile segments, will remain strong through 2024.
The Service Providing segments have a few weak spots rounding out 2023. The Professional & Business Services sectors, generally Michigan’s employment growth engine, is expected to remain restrained through 2024. Specifically, Trade, Transportation & Utilities, along with Information and Financial Activities show sluggish growth throughout the first half of 2023 and are expected to remain sluggish through 2024. However, two service-based segments remain in growth mode, and that is the Education & Health Services and the Leisure & Hospitality segments.
Michigan’s overall unemployment rate is expected to bottom out around 3.8 – a rate not observed since 2000. That is, the tight labor force conditions that are frustrating Michigan’s employers are expected to persist, at least in the immediate future. As 2024 rolls around, we may see the labor market start to loosen a bit, but otherwise it will remain a job-seeker’s market.
Finally, Michigan residents, like those across the nation, must contend with reduced federal stimulus in the many forms it took post COVID19. Much of this reversal was experienced in the second quarter of this year. We project a decrease in annual personal income for 2023, driven primarily by a pull-back on federal relief programs. Accordingly, anticipate a drop in personal income of just over 7.1 percent in 2023. Aside from transfer payments, other components of personal income remain relatively persistent over time. Expect wages and salaries to gain relative to inflation, with growth rates of 4.4 and 4.2 percent, respectively, for 2023 and 2024.