Michigan’s economy will feel the effects through the remainder of 2021 of the delta variant of the coronavirus and the continuing shortage of computer chips that is hampering auto production, according to University of Michigan economists.
An economic outlook update from the university’s research seminar in quantitative economics released today indicates that the state’s economy “kicked into high gear” in June and July with the addition of 458,000 jobs. This growth follows “three months in which the number of government jobs did not increase”.
Unfortunately, we expect the Delta wave of the COVID-19 pandemic to delay some economic growth next year. Microchip shortages plaguing the state‘s auto industry remain a major obstacle to the Michigan’s economic recovery A lasting resolution to these issues is not yet in sight, “University of Michigan economists wrote in the Updated Economic Outlook.
On the bright side, the outlook is for Michigan to continue to experience “solid job growth” in 2022 and 2023, recouping 98% of the jobs lost in the second quarter of 2020 when the COVID-19 pandemic began.
“It is important, in these frustrating times, not to lose sight of the fundamental forces that should drive the recovery over the next two years,” wrote the economists. “First, personal income has increased over the past two years, supporting consumer demand. Second, labor demand is skyrocketing, with the June job opening rate for the Midwest reaching an all-time high. Third, macroeconomic policy is much more focused on restoring full employment than after the Great Recession.
Earlier this week, economists at the University of Michigan released an update on the U.S. Economic Outlook that is based on the assumption that “there will be a significant wave of COVID-19 infections this fall driven by the faster-spreading Delta variant, “although” we didn’t expect widespread government restrictions on behavior to return.
“We expect a moderate deceleration in output and employment growth in the second half of 2021 compared to the pace in the second quarter,” the economists wrote in the national outlook.
The national outlook forecasts a real GDP of 5.5% for the United States in the fourth quarter and 5.8% for the whole of 2021. The US real GDP is expected to increase to 3.4% in 2022 and to 2, 4% in 2023, according to the University of Michigan outlook.
Economists predict that core inflation will average 3.5% in 2021 and 3.4% in 2022 before falling to 2.4% in 2023.
“In the wider economy, many raw materials remain difficult to obtain on time, in part because of transport bottlenecks, exacerbated by a shortage of truck drivers. Many manufacturing and service industries are reporting labor shortages, wage increases and rising prices. Until supply chains stabilize, pressure on producer and consumer prices is expected to continue, ”according to the outlook.
US production of light vehicles is expected to reach 16.6 million units this year before increasing to 17.3 million units in 2022 and 17.6 million in 2023.