COVID-19 pandemic and resulting economic contraction is affecting Michigan more than many other states, says new investigation by Comerica Inc.
Regional economists at the Dallas-based bank report that Michigan’s GDP fell at an annualized rate of 41% in the second quarter. During the same period, U.S. GDP declined at an annualized rate of 32.9%, while real GDP fell by 5%, according to at the Bureau of Economic Analysis.
“We expect Michigan’s results to be a little worse than average due to the concentration of the state‘s auto industry,” economists Robert Dye and Daniel Sanabria wrote in the report released Monday. “Auto assembly lines were closed in April and thousands of employees were put on leave, affecting the state’s economy.”
Economists said they expected slightly better times in the future.
“We expect some recovery in the third quarter, reflecting the recovery in auto production and the partial rollback of social mitigation policies,” Dye and Sanabria said in the report.
The report notes that annualized GDP is expected to grow 17.3% in the third quarter, followed by 8.3% growth in the fourth quarter and single-digit growth in 2021.
âAfter the very high peak rate of 20% in Q2 2020, we are showing a fairly rapid improvement to around 15% by the end of this year,â the report says. “However, after the rapid partial reabsorption of workers on leave this year, we expect labor utilization to slow significantly in 2021.”
The report notes that it will likely take three years to ârecover from the peak in GDPâ that occurred in the fourth quarter of last year.
Separately, a University of Michigan report released Friday noted that Michigan is not expected to rebound to pre-pandemic employment levels until 2024.
The toll of the coronavirus pandemic on the city of Detroit will also be “deep and lasting”, with the number of jobs in the city not expected to rebound until 2023, according to economic forecasts. The UM report noted that Detroit is on track for a faster recovery than the state in part because of several large-scale real estate projects that remain underway.