Michigan’s economic recovery from the COVID-19 pandemic is uneven and lagging behind the nation, according to the Michigan Entrepreneurship Score Card released Tuesday.
Commissioned by Michigan Celebrates Small Business, in conjunction with the Small Business Association of Michigan, this year’s report required several enhancements to assess the condition of the state’s entrepreneurial economy going into and coming out of the pandemic, according to the organizations.
The Entrepreneurship Score Card includes the traditional Entrepreneurial Climate, Change, and Vitality indexes, as well as an account of important factors contributing to the recovery, a review of how Michigan has fared in previous economic recoveries, and a multifaceted analysis of the small business recovery.
“Michigan’s small businesses were among the hardest hit economically and we know that a full and recovery isn’t happening overnight,” says Brian Calley, president of SBAM. “Restrictions and changes in consumer behavior during the pandemic tended to impact small businesses harder than others but there is reason to be optimistic as the economy is rebounding.”
The Score Card revealed that Michigan’s topline economic statistics don’t tell the whole story, showing that:
- The “Small Businesses Open” and “Small Business Revenue” indexes show significant improvement from the depths of the recession but lag the national average.
- Labor force participations rates have improved since they bottomed out in the spring and early summer 2020, but they remain behind pre-pandemic levels. Lack of available workforce has emerged as a critical obstacle to the recovery of small businesses.
- Personal consumption spending on goods has fully recovered to pre-pandemic levels, but personal spending on services remains far behind. This creates challenges for small businesses which dominate the service industry.
- Federal spending in the form of stimulus payments, the Paycheck Protection Program and increased unemployment payments were key to the early stages of recovery.
- The continuation of supplemental unemployment payments and increasing costs have created new challenges for small businesses working to recover.
Based on trends following previous recessions, Michigan can hopefully expect an abrupt turnaround over the next two years driven by businesses ramping up, new start-ups, and revitalization of businesses laid dormant by the recession, Calley says.
The full Score Card report is available here.
