DBusiness Magazine
April 1, 2025
Time Keenan
The metro Detroit region’s future business outlook is buoyed by stable economic conditions and major investment projects, but countered by uncertain federal economic policies, pressure from emerging technologies like AI, and slow population growth, according to the Detroit Regional Chamber’s State of the Region 2025 report released today.
The report was presented this morning at One Campus Martius in downtown Detroit.
Related | View the 2025 State of the Region Report
Encouraging signs, according to the report, are stable national regional economic conditions with low unemployment and positive job growth in 2024. Also, U.S. manufacturing showed signs of improvement going into 2025 after contracting over the past two years.
Other positive signs include Michigan’s R&D tax credit passed in January 2025, which should stimulate investments in research and bolster economic growth while leveraging the state’s existing businesses and world-class research universities.
Regional investment projects, like the Gratiot Innovation District, the Gordie Howe International Bridge, Hudson’s Detroit, the University of Michigan Innovation Center in Detroit, and the Henry Ford and Michigan State University Health Sciences Research Center bode well for the future of the area.
“The region’s economic momentum continued in 2024 with low unemployment, increased new business applications, and exports reaching a five-year high,” says Sandy K. Baruah, president and Chief Executive Officer of the Detroit Regional Chamber. “Michigan now holds the national top ranking for business-funded R&D and next-generation mobility investments and is attracting increasing venture capital investments. All of these elements have fueled our economic resilience.”
On the challenging side of the ledger, uncertainty has elevated as “dramatic” federal economic policies are discussed, including impacts from tariffs and potential federal funding cuts for infrastructure and university research.
The digital transformation through artificial intelligence will increase the need for businesses to adopt new technologies, increase productivity, and remain competitive is another hurdle.
The report says Michigan’s automotive and mobility leadership faces “significant pressures” from emerging technology adoption, domestic and global competitors, and impacts on the supply chain, including tariff effects.
Michigan’s limited population growth was concentrated in international migration, while the state continues to lose population domestically to other states, adding uncertainty to growth going forward with potential immigration policy changes.
“Despite the region’s growth trajectory, we trail the national average as well as our national regional competition,” Baruah says. “Our region ranks in the bottom third in educational attainment, GDP growth, population, and employment growth — all of which tie directly to the ability to grow and retain high-tech talent.”
While the Detroit region’s economy has grown for three consecutive years, increasing 5 percent since 2019, it lags its peer regions and the nation (9 percent) in GDP growth. In 2023, the Detroit MSA reported a real GDP of $276 billion, the 16th largest economy among all
U.S. metros. It is 15th among peer cities in population growth at 1% over the last 10 years.
The monthly seasonally adjusted unemployment rate in January was 4 percent in the U.S., 5.3% in Michigan, and 5.1% in Detroit. Employment overall has grown .03% since 2019, according to the report.
The Detroit Regional Chamber’s report identified the region’s top industries. They are:
- Health care and social assistance: 14% of the economy
- Manufacturing: 12%
- Professional, scientific, and technical services: 10%
- Retail trade: 10%
- Government: 9%
- Accommodation and food service: 8%
Five key takeaways from the Detroit Regional Chamber’s report include:
The regional economy remains resilient through 2024: The Detroit region’s unemployment remained below 5% for three consecutive years. Payroll employment is up by 5,500 from 2023. The region’s housing market is a bright spot ranking No. 1 among peers in homeownership and among the most affordable in the nation.
The Detroit region lags its peers in most key metrics: The Detroit region ranks in the bottom third in educational attainment, GDP, population, and jobs. The Detroit region’s employment returned to 2019 levels while peers like Austin (21%), Dallas (13%), and Phoenix (13%) grew significantly.
Concerns persist as consumers grapple with higher prices: Inflation concerns doubled for Michigan voters, increasing from 16% to 29% since September 2024. Regional inflation fell to 3% in 2024, nearly reaching the Federal Reserve’s 2% target, after reaching a peak of 8% in 2022. The average household in the Detroit region lost $3,000 in purchasing power due to inflation in 2023.
The region and the state continue to provide a prosperous business environment: Michigan ranks No. 1 for business-funded R&D and next-generation mobility investments among states. Michigan’s new business applications are 28% higher in 2024 than 2019 levels.
Michigan’s economy is disproportionately vulnerable to fluctuating trade policy: The region’s export market is at risk, despite growing 11% since 2019, reaching the highest levels seen in five years. More than 234,000 jobs in the Detroit region depend on trade and investment with Canada. Michigan’s manufacturing-centered economy — especially within the automotive sector — as well as its agriculture industry and proximity to trading partner Canada, leave it particularly vulnerable to the negative impacts of volatile trade policies.
“The overall economy has been strong, inflation continues to decline from its 2022 peak, the labor market remained solid in 2024, and robust consumer spending fueled GDP growth,” Baruah stresses. “However, consumers are still concerned, with sentiment remaining below pre-COVID-19 pandemic levels and the Detroit region continuing to fall behind on key indicators compared to its peers.”