Washtenaw County faces significant economic headwinds over the next few years, but its highly educated workforce, diverse employment base, and institutional anchors will provide important buffers against volatility, according to a new outlook released last week.
The 40th annual Washtenaw County Economic Outlook, commissioned by Washtenaw Community College, shows the county’s outlook for the next 2.5 years is “notably downshifted” from last year’s forecast.
In their report, Gabriel Ehrlich and Donald Grimes of the University of Michigan’s Research Seminar in Quantitative Economics, anticipate employment growth in the county will continue through 2027, but at a slower pace than in recent years.
“The economic landscape has shifted dramatically since our last forecast for Washtenaw County,” the report states.
“While we celebrated the likelihood of a ‘soft landing’ last year, we now face significant headwinds at the national, state, and local levels that have moderated our outlook.
“Both the national and local economies, which showed encouraging resilience through much of 2023 and early 2024, have since displayed signs of strain. Employment growth has slowed, and unemployment rates have begun to trend upward.
“Combined with substantial policy uncertainty surrounding tariffs, and the prospect of reduced federal research and education funding, Washtenaw County will find itself navigating a challenging road over the next two and a half years.”
Tariffs are expected to remain disruptive in the short run as supply chains adjust, according to the report. While Washtenaw County may be largely protected from direct tariff impacts within the automotive sector, secondary impacts could be felt due to broader economic ties to the auto industry.
A significant concern is the prospect of higher education research funding cuts, according to the economists.
“The proposed reductions in federal research funding are a potentially greater threat to Washtenaw County due to the importance of the region’s higher education sector,” write Ehrlich and Grimes.
“With less funding to support research payrolls, we forecast state government employment, where the University of Michigan and Eastern Michigan University are classified, to decline by roughly 2,000 jobs relative to trend over the next two years.”
Overall, economists project the Federal Reserve will continue cutting interest rates over the next two years. In turn, they project large personal and corporate tax cuts beginning in 2026 amounting to $200 billion per year, outweighing the revenues collected by tariffs and “thus providing a substantial short-term stimulus.”
Overall, the economists forecast the total number of jobs in Washtenaw to grow by 0.2 percent in 2025, followed by 0.4 percent in 2026, and 0.6 percent in 2027.
That growth would be well below the pre-pandemic average of 1.9 percent annually from 2010–2019.
Meanwhile, the county’s labor force is projected to steadily expand to the point it exceeds pre-pandemic levels by 6.7 percent in 2027. Washtenaw’s jobless rate, which rose from 3.5 percent last May to 4.7 percent in January, is projected to stabilize at about 4.4 percent over the forecast horizon.
Additionally, three more years of real wage growth, though modest, is expected for the county.
The Washtenaw County Economic Outlook was presented last Thursday as part of the President’s Leadership Recognition Luncheon.
Rose B. Bellanca, president and CEO of WCC, hosted nearly 200 business, industry, government, and community leaders at the college, which educates more than 21,000 students annually.
U-M economists Jacob T. Burton and Michael R. McWilliams from the Research Seminar in Quantitative Economics also worked on the forecast.
To access the report, visit 2025-2027 Washtenaw County Economic Forecast.
Washtenaw Community College offers associate and certificate programs in health care, business, STEM, advanced transportation and mobility, and more. The college also works through community, business, and union partnerships to develop specialized training programs to meet the region’s workforce talent needs.
For more information, visit wccnet.edu/.
