Michigan’s economy is stronger than expected during a pandemic. Thank the stimulus.


In total, these payments were equivalent to about 8.5% of the state’s annual personal income, or about $ 4,350 per person. Economists estimate that residents spent up to 75 percent of that money, rather than saving it.

Michigan consumer spending is now above january levels and above the national average, in large part due to increased online sales.

“Michigans spend more freely than elsewhere,” said Gabriel Ehrlich, a University of Michigan economist who forecasts state and national economies. “We have seen a stronger recovery in consumer spending here than nationally.”

Michigan lost nearly one in four jobs this spring. The state had recovered 909,000 of those jobs by the end of July, but was still down about 370,000 jobs from February, according to preliminary federal data.

In April, Michigan led the country with an unemployment rate of 24% as COVID-19 cases and deaths peaked and Whitmer shut down much of the economy. But the rate fell in June and July, falling below the national average to 8.7%, more than double the rate of 3.6% in February.

With parts of the state’s economy still closed, Michigan residents are spending less on things like movie tickets, plane flights, and non-taxable services.

But that leaves residents with more to spend on taxable goods, including automobiles, home improvement supplies, computers and other products often purchased online, officials said.

This is part of the reason why state sales tax collections haven’t fallen as much as state economists predicted in May, when they lowered projections by $ 8.7 billion. from $ 7.5 billion for the current fiscal year.

On Monday, they pushed those projections back to $ 8.2 billion – still a drop, but significantly less than feared.

Among the winners and losers so far this year:

  • Restaurant tax collections are down 23% for 2020 as consumers avoid public spaces.
  • Building materials, gardening supplies, and home improvement projects are all going well.
  • Total vehicle sales are down, but Michiganders who buy cars are buying more expensive ones, said Jim stansell, Senior Economist for the non-partisan House Fiscal Agency.
  • Michigan Lottery sales have increased by $ 160 million this year as the state has had “some of the most spectacular lottery months we’ve ever had during the pandemic,” Zin said.

This unexpected increase in the lottery helped support the state’s School Aid Fund, the primary source of K-12 class spending at Michigan schools.

Officials had predicted that revenue poured into that fund would decline by a combined $ 2.5 billion in 2020 and 2021, but on Monday estimated that the size of the hole would likely end up approaching $ 1 billion.

There may be several reasons why consumer spending in Michigan overtakes the country, Ehrlich said.

While the Michigan unemployment insurance agency was criticized by the initial claims, the state has done “a better job of getting benefits to people in a timely manner” than some other states, he said. .

And Michigan has also been one of the federal government’s biggest recipients. “work-sharing” program, which allows employers to reduce hours but ensure full payment of workers.

It’s also possible that Michigan residents are simply willing to spend more because they’re “more optimistic about the future than other states,” Ehrlich said.