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Michigan’s Residency

By James Martinez 

Forecasting One of the Nation’s Most Cyclical Economies 

On the heels of the second major recession since 2009, “resiliency” is again gaining increased attention in economic development and raising questions about what lies ahead for Michigan’s economy. The question of resiliency arose with a Detroiter interview with economist Gabriel Ehrlich, director of the University of Michigan’s Research Seminar in Quantitative Economics which forecasts the U.S., Michigan, Detroit, and Oakland County economies. 

IT’S BEEN OVER A YEAR IN THIS PANDEMIC ECONOMY. WHAT HAS SURPRISED YOU? 

Number one is the economy has proven to be very resilient with respect to COVID. There are a lot of people who are out of work and suffering and we can’t be insensitive to that. It’s a tough situation. But it’s been incredible to see the economy react. Just the fact that the automakers can operate. That manufacturing can operate on. The fact that so much work has moved online and remote and how the economy has adapted to that. The public health situation has not gotten back to normal, it’s really that the economy has adapted. 

IS THAT RESILIENCY A PRODUCT OF WHAT WE LEARNED AND APPLIED FROM THE GREAT RECESSION, OR IS IT MORE OF A PRODUCT OF THE DIFFERENT NATURE OF THIS EVENT-DRIVEN CRISIS? 

Both. It is a different nature of recession, there were structural problems and imbalances in the U.S. economy in 2007. Aggregate demand was too low coming out of the Great Recession, and so it was a demand-side recession. And, this is a supply side recession because there’s been this massive disruption and some sectors of the economy really can’t produce or do business the way they did before. But Michigan has diversified some in the past years. That should make the state’s economy less of a boom-and-bust type of economy. 

DO YOU THINK THAT THE OLD ADAGE ABOUT WHEN “THE COUNTRY CATCHES A COLD, MICHIGAN CATCHES THE FLU” STILL HOLDS TRUE AFTER THE PANDEMIC? 

A milder flu, maybe. Michigan is still going to be more cyclical than the U.S. economy, but hopefully not as much as 20 years ago 

HOW DO YOU BEST MEASURE RESILIENCY? 

It depends on the context as people can define resiliency different ways. Jobs is part of it. You could also look at how are people at the lower end of wage distribution and the income distribution doingIt depends on the exact conversation and what you mean when you say “resiliency.” 

HOW IS MICHIGAN’S ECONOMY FROM A STANDPOINT THAT IT CAN KIND OF WEATHER DIFFICULT TIMES AND REMAIN RESILIENT IN THE FUTURE?  

The problem is that you don’t know until the difficult time comes. But there are things we can do. College education, for instance, we know that helps people have a more stable labor market experience. Typically, the unemployment rate doesn’t move around as much for people with college degrees. They typically fare better in a recession and that gets back to one of the best things we can do for equity. Making sure we have pathways for people to credentials, and that’s college degrees but also other credentials in the labor market or vocational training. It’s investing in people.