Detroit Regional Chamber > Chamber > UM Study: Detroit Economy to Avoid Worst Impacts of National Slowdown

UM Study: Detroit Economy to Avoid Worst Impacts of National Slowdown

February 7, 2023

The Detroit News
Feb. 6, 2023
Candice Williams

Detroit is expected to avoid the worst impacts of a national economic slowdown despite lingering inflation, according to a University of Michigan study released Monday.

According to the Detroit Economic Outlook for 2022-27, a pent-up demand for vehicles is among factors that would help continue blue-collar employment in the city.

“We expect Detroit’s resilience in recovering from the pandemic to date to translate into continued growth — even amid a challenging national economy,” Gabriel Ehrlich, director of UM’s Research Seminar in Quantitative Economics, said in a statement Monday.

The study notes that while economists project Detroit’s jobless rate will rise from a seasonally adjusted 7.8% in November 2022, its predicted peak at just above 9% would be in line with the average in 2018. Economists project employment within Detroit and for city residents will grow from 2023 to 2027, ending among pre-pandemic levels. The city’s jobless rate is expected to settle at 7% in 2027, which would be the lowest since 2000.

In recent years, blue-collar work in Detroit has included construction projects such as the Gordie Howe International Bridge, the Stellantis Mack Assembly complex, General Motors Co.’s Factory Zero and an Amazon fulfillment center.

The economists estimate that employment in the city had recovered about 86% of the initial pandemic losses by the first quarter of 2022. The city has had some challenges, however, with a decline in Detroit’s jobless rate being partly due to a decline in its labor force rather than an increase in employment, according to the report. The city’s seasonally adjusted resident employment count dropped by nearly 1,300 from December 2021 to October 2022.

The city gained 8,000 jobs in 2022 and is expected to gain about 2,200 jobs this year, according to the study, which predicts average growth of 2,700 jobs per year through 2027.

As for wages, growth of 4.3% is projected this year. Economists expect wage gains to outpace inflation from 2024 to 2027 as consumer price increases subside.

By 2027, the average annual wage of workers within the city of Detroit will reach $90,700, 32% higher than in 2019, according to the study. The average wage of Detroit residents should reach $47,500 by 2027, up from $39,200 in 2021.

“That would be welcome progress, but it would still be only slightly over one half the level paid by establishments located in Detroit that year,” the researchers wrote.

Across the state, the average annual wage will increase from about $65,000 in 2022 to $75,500 during that same period, the report said.