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Detroit chamber says regional economy is catching up

Detroit Free Press

By Matthew Dolan 

January 25, 2017

Moving on up, but not yet in ahead of the pack.

Those are the latest conclusions to be released today from the Detroit Regional Chamber about the state of the regional economy compared with its similarly sized competitors.

“As the data in this report suggest, the needle is indeed moving in the right direction,” Detroit Regional Chamber President and CEO Sandy Baruah, said of his business association’s third annual economic overview of the 11-county region.

The Detroit region as defined by the chamber is made up of 5.4 million living in and around the city in more than 300 municipalities, including some of the nation’s wealthiest and poorest communities. It is also home to more than 300,000 businesses, including 11 Fortune 500 companies.

In recent years, the region has attracted a new buzz thanks in part to a resurgent auto industry and a once-bankrupt city increasingly seen by locals and outsiders as a more attractive place to live and work.

First the good news.

The chamber’s most recent assessment found that in 2015, Detroit moved up five spots to number 30 in the Kauffman Innovation Index, which measures on the numbers of and opportunities for entrepreneurs. The region also topped its peers for the rate of growth of home values and new patents awarded by the government.

The state — and the Detroit area in particular — has also attracted a substantial number of new businesses and interest from venture capital who fund entrepreneurs, according to the report.

“The headline is that the region has made good progress since the Great Recession,” Baruah said in an interview ahead of his lunchtime presentation today on the report at the Westin Book Cadillac hotel in downtown Detroit.

Following Baruah, General Motors’ chief economist Mustafa Mohatarem is expected to speak about broad economic trends, followed by a discussion about the local economy with Troy-based Kresge Foundation President Rip Rapson, state Budget Director John Roberts and University of Michigan Business Professor Marina Whitman.

Among the topics may be the Detroit region’s poor performance compared similar regions in education attainment, including the number of workers with a higher education degree.

The region also continues to struggles with achieving a net increase in the number of residents.

Population growth in the region is essentially flat between 2010 and 2015. Last year, there were slightly more moves out of Michigan than into the state, according to United Van Lines’ Annual National Movers Study.

But that’s considered a win for the region because of the region’s losses in recent years. The city of Detroit, for example, lost 25% of its population between 2000 and 2010, according to the federal Census, a trend that could reverse for the first time in decades starting this year.

“We’ve reached the bottom of the U curve,” Buruah said. He added that “we have to attract residents not only from other states but from other countries. That’s really the only way we’re going to grow our population.”

Personal income continues to grow, rising 13% between 2010 and 2015, beating the national average of 12.2% over the same period of time.

But the Detroit region also lags several other metropolitan areas on the same measure, including Chicago, Pittsburgh and Seattle.

The regional Detroit unemployment rate peaked in July 2009 and has continued to decline, moving closer to the national rate. Anchored by the University of Michigan, Ann Arbor continues to record the lowest unemployment rate of 4.1% while Detroit and Flint reported unemployment rates at 6%.

Home values are rising but still fall below levels in 2009.

Between 2010 and 2015, the Detroit area median home values increased by 21.4%, leading peer regions in growth and outpacing the national average. Pittsburgh was the next closest peer region with 17.2% median home value growth.

The actual value of homes on average still haven’t reached 2009 levels, with the median value at $151,000 compared to $158,000 eight years ago.

An integrated regional transportation system in metro Detroit continues to be lacking. While the proposed millage for regional transit was narrowly defeated in the November election, the need for coordinated regional transit remains, according to the chamber.

“We’re kind of regrouping right now,” Baruah said. “We’re not giving up.”

Among the top 50 metropolitan areas by population, the Detroit area has the 19th highest growth rate in real GDP from 2010 to 2015, at 12.2%. Detroit now ranks fifth among similar regions in GDP growth since 2010, outranked by Dallas, Seattle, Minneapolis and Pittsburgh.

The Detroit region gained more than 225,000 private sector jobs since 2010, surpassing Boston, Minneapolis and Seattle in the number of jobs gained.

The region has outpaced the national growth rate by 3.6 percentage points. But the region still lagged Dallas, Atlanta and Seattle.

For the region’s economy to become among the best performing in the nation, the Detroit must not only make substantial gains, but at levels far above those achieved by most cities, according to Baruah.

“We need to make out -sized gains for an out-sized period of time,” he said.

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