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Metro Detroit economy hit hard by COVID-19: New report shows where it hurt the most

Detroit Free Press

February 25, 2021

By Adrienne Roberts

The pandemic has impacted the U.S. economy and workers unevenly, and that holds true in metro Detroit, with sectors such as automotive and manufacturing showing resiliency while small businesses and the leisure and hospitality industry getting hit hard.

That’s according to an annual report from the Detroit Regional Chamber that looks at the state of the region’s economy. The report for 2021, released Thursday, focused on the economic impact of the pandemic.

Concerning metro Detroit statistics include:

  • Private-sector jobs are down 10% compared with the same period in 2020.
  • Hotel occupancy rates declined 35.5% in December 2020 compared with the same month in 2019. That exceeded the national decline of 32.3%.
  • Consumer spending was down nearly 20% by the end of December compared with January 2020, and the transportation and arts, entertainment and recreation industries saw the greatest declines, both down more than 60% over that period.

More promising statistics include:

  • The number of new business applications in Michigan increased  42.2% in 2020 compared with 2019, a leading indicator of growth after a recession, the chamber said.
  • In the metro Detroit housing market, single-family homes’ median sale price increased 23.3% from the first quarter to the third quarter of 2020, rising to $236,300.
  • New construction permits in 2020 matched 2019 levels.

“There is often a strong correlation between national economic downturns and deep recessionary periods for Michigan,” Sandy Baruah, president and CEO of the Detroit Regional Chamber, which represents businesses across southeast Michigan, said in a news release accompanying the report.

“However, critical sectors for our economy like automotive, manufacturing and housing have all shown remarkable resiliency.”

Baruah is referring to the Manufacturing Purchasing Managers’ Index, which is based on a survey of manufacturing supply executives. The index showed growth for eight consecutive months, beginning in May through December.

While certain sectors have recovered, many haven’t. More than 500,000 private-sector employees in metro Detroit were unemployed from the start of the pandemic through April 2020, and employment remains below pre-pandemic levels.

In the city of Detroit, the unemployment rate rose from 8.8% in 2019 to 20% in 2020, according to an economic outlook prepared by a group of Michigan universities and released last week. So far in 2021, the jobless rate has declined to 14.3%, but likely won’t return to pre-COVID-19 levels until 2025.

Meanwhile, the number of small businesses open in metro Detroit has decreased by more than 32% as of the end of last year, with a nearly 40% drop in revenues since January 2020, the chamber said.

“COVID-19 continues to leave deep scars on (metro Detroit’s) businesses and communities,” Baruah said.

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