Throughout 2021, the Detroit Regional Chamber has kept a pulse on the perceptions and reality of the U.S. and regional economy. Findings have shown that many people are concerned about the economy and the direction the country is headed. However, many traditional economic indicators have pointed toward a robust recovery after the past two years spent grappling with the COVID-19 pandemic.
The Chamber explored this complex relationship between consumers’ negative economic perceptions and their behaviors in its eighth annual State of the Region report, as well as the ongoing economic impact of the COVID-19 pandemic on employment, consumer confidence, industry sectors, and more.
In a recent Chamber poll of registered Michigan voters, 63% of respondents say they believe the economy is on the wrong track, and 90% reported concerns about inflation. However, 74% indicate they are economically better off or about the same as they were pre-pandemic, and consumer spending on goods is up 24% since 2019.
“The economy bottomed out in spring of 2020, but it has shown surprising resilience and strength, literally, just right after bottoming out,” said Sandy K. Baruah, president and chief executive officer at the Chamber. “And what’s surprising is that, unlike other past economic crises, Michigan is more than keeping up with the national peers. In fact, Michigan is at least holding its own, if not doing better, in terms of keeping up with the national recovery, which is quite strong.”
Positive trends that show Michigan’s resilience through COVID-19 include:
- Michigan’s economy ranks No. 1 among 37 states with a population of two million or more, according to a Bloomberg report.
- Income and wages have risen since the start of the pandemic, including in lower-paying sectors, such as hospitality, which saw a 13.4% increase since January 2021.
- The unemployment rate in Michigan is at pre-pandemic levels, measuring at 4.3% in December 2021.
- There was a 41% increase in job postings in 2021, despite an overall 2.6% decrease in private sector jobs since February 2020.
- New business applications in Michigan hit a record high in 2021.
Although a lot of the data is encouraging, there continue to be long-standing challenges in the region, including labor participation and ongoing racial inequities. More than 1.5 million Michiganders quit their jobs in 2021 with nearly 160,000 leaving their jobs in April 2021 alone – an all-time high.
Baruah also cited the sobering data points such as Detroit’s population being nearly 80% Black but only having 10% of businesses that are Black-owned, Detroit ranking 99th out of 100 of the largest cities in terms of entrepreneurship, and only 17% of Detroiters having a bachelor’s degree or higher.
“Ongoing racial inequities – this impacts us all and is a huge drag on the economic growth for all of our businesses and for all of our communities, not just in Detroit, but frankly across the country,” Baruah said.
Other concerning trends include:
- Private sector jobs recovered quickly but remain lower than pre-pandemic levels.
- Labor force participation in Michigan peaked in 2000 at 69% and fell to 60% in December 2021, resulting in Michigan ranking 40th among all states.
- In 2021, there were 33% more resignations than in 2020. According to Baruah, there were almost 160,000 people who voluntarily resigned, which was a record high.
As the region continues to recover from its COVID-19-induced recessionary period, the State of the Region report critically explored where the region stands economically and identifies areas of improvement to keep Michigan moving toward a more prosperous future.