MSU teams with state’s top universities to provide economic forecasting for city of Detroit

MSU Extension will work with University of Michigan, Wayne State to provide city of Detroit economic analysis and forecasting.

Downtown Detroit

The state’s top three public research universities will collaborate to provide Detroit-specific economic data analysis and forecasting services to the state’s largest city.

The City of Detroit University Economic Analysis Partnership brings together the economic forecast and modeling power from the University of Michigan, Michigan State University and Wayne State University under the five-year agreement.

The MSU effort will be led by the MSU Extension Center for Local Government Finance & Policy, which works closely with municipal governments on fiscal analyses and increasing public understanding of fiscal issues.

Eric Scorsone, director of MSU Extension Center for Local Government Policy & Finance

“The research team will make the core forecasting model available to city staff for the city’s use,” said Eric Scorsone, director of the MSU Extension center. “They will be able to change forecast assumptions to produce their own forecasts or to perform scenario analysis.”

“Our partnership with the city of Detroit represents another important step in the city’s post-bankruptcy recovery and can be an important positive step in the eyes of residents, investors, business leaders and the credit market,” said Gabriel Ehrlich, director of the Research Seminar in Quantitative Economics at U-M.

The partnership will be led by RSQE, but the work will be collaborative. U-M will apply the same econometric modeling it uses for its annual Michigan and U.S. economic forecasts for the creation of Detroit economic forecasts. Michigan State’s Center for Local Government Finance and Policy will contribute revenue modeling and forecasting, while Wayne State’s Department of Economics will bring locally relevant data and its housing and property tax modeling.

As part of the project, the universities will accomplish three main tasks:

  • Build an econometric forecasting model for the city of Detroit economy and the city’s major tax revenues.
  • Develop local economic indicators, indices and reports. This would include constructing estimates of Gross City Product.
  • Present the city’s economic forecast each year.

The researchers will use public data including that collected by the Bureau of Labor Statistics, American Community Survey, Quarterly Census of Employment and Wages, County Business Patterns, Internal Revenue Service, Bureau of Economic Analysis, Federal Housing Finance Agency and data from the city of Detroit and other local sources such as Data Driven Detroit, the Detroit Economic Growth Corp. and Detroit Future City.

Michigan State and Wayne State researchers have extensive experience using local governments’ internal data in economic analyses.

“We’ll combine the city’s internal data with publicly available data to construct Detroit-specific estimates of building activity, measures of activity in residential and commercial real estate, total commerce and tourism activity,” said Allen Goodman, director of the Master’s program in economics at Wayne State.

The universities will work with the city’s forecasting and economic analysis unit within the Chief Financial Officer’s budget office. Most public economic data is at the county or regional level. Detroit-specific data can allow the city government and community stakeholders to quantify local economic conditions and to plan, design, finance, and evaluate programs to improve economic opportunities for Detroiters.

“The city and the universities envision creating one of the nation’s leading partnerships between a major city and its regional research universities,” said Steven Watson, Detroit’s director of forecasting and economic analysis.

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