Economists are more positive than the average consumer about the economic impact on Detroit if it goes through a planned bankruptcy, according to a report released by Oakland University.
In the first policy report from Oakland University’s Southeastern Michigan Economic Outlook, participants were asked whether they disagreed or agreed with the statement, “The city of Detroit bankruptcy will advance the economic vitality of southeastern Michigan.”
Of the seven economists on the university’s panel of experts, 100 percent agreed the bankruptcy would be good for the Detroit. Of the 22 businesses executives on a separate panel, more than 50 percent agreed or strongly agreed it would be a positive result for the city. However, of the 422 consumers who took the consumer confidence survey, only 30 percent agreed or strongly agreed that the city would benefit from the bankruptcy.
“I think the economists (and business executives) have a much broader perspective about understanding the impact of the bankruptcy on retaining businesses (and) attracting businesses,” says Jonathan Silberman, professor of economics at Oakland University in Rochester Hills. “The bankruptcy process — even in business — provides renewal and a chance to more effectively use resources for growth.”
While it wasn’t included in the final report, Silberman says it was interesting to see that the consumers who live in Detroit had a much more positive view of the bankruptcy than those who don’t. “They experience the hardship of (living in Detroit), and I interpret this as they see the bankruptcy as a chance for the city to improve,” Silberman says.
While all of the economists surveyed agreed that the bankruptcy was positive, it’s important to note that they didn’t strongly agree with the statement. According to Silberman, they recognized there’s some uncertainty about how the bankruptcy will play out.
Those who are interested in participating in future consumer or business confidence panels or submitting a potential question for a future forum can find more information at oakland.edu/business/economic-outlook.