In keeping with the spirit of the holiday season, I wanted to share with you the hope that prevails within the Michigan economy for the coming year. Despite the rough road we have been on for the past few years, we can honestly say that the worst is behind us.
According to the University of Michigan Research Seminar in Quantitative Economics, held in late November, slow and steady growth will win the race in 2011:
“No Quick Fix
We expect the sluggish pace of economic recovery that characterized the past two quarters will continue in the near term, with real GDP growth of 1.9 and 2.2 percent in 2010 (Q4) and 2011 (Q1), respectively. Many of the impediments to more rapid growth will eventually work themselves out, but that will take time.
For now, the economy continues to struggle with the impact on consumer spending of both poor job prospects and ongoing debt reduction, the belt-tightening within state and local units of government, and the aftermath of the housing collapse. The impact of the fiscal stimulus on economic activity is dwindling, and any stimulus from the Fed’s second stage of quantitative easing will take time to develop.
The 2011–2012 Outlook
The economy gains some momentum by the middle of next year and accelerates during 2012. Real GDP growth averages 2.5 percent during the second half of 2011, 3.1 percent during the first half of 2012, and 3.4 percent during the balance of that year. Residential building picks up, and gains in exports begin to outpace rising imports, but government purchases continue to shrink. During 2012, the pace of consumer spending edges higher, and inventory investment increases to grow more in line with demand.“
So, the message for the end of the year is to rest up, acknowledge what you have been through, and use that restored energy to become an innovator in 2011. It is the newly-skilled, entrepreneurial individuals that will be the first hires in 2011 and beyond.
Happy Holidays and a Productive and Prosperous New Year!