Report: Despite Good Economic News, Southeast Michigan Faces Negative Perceptions

In a case of good news and bad news, the 2024 State of the Region report issued today by the Detroit Regional Chamber in partnership with Citizens finds that “despite a continued strong economy, disconnect remains with negative perceptions.”
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Metro Detroit skyline
The 2024 Detroit Regional Chamber report states the region is showing some strong economic indicators, but many think the economy is weakening. // Stock photo

In a case of good news and bad news, the 2024 State of the Region report issued today by the Detroit Regional Chamber in partnership with Citizens finds that “despite a continued strong economy, disconnect remains with negative perceptions.”

The annual State of the Region Report is based on multiple data sources — federal and state data, recent Chamber Michigan voter polling, and Gallup research.

The report states unemployment in the Detroit Region stayed at or below 4 percent for 22 straight months, falling for the third consecutive year in 2023. Economists generally attribute an unemployment rate that hovers between 3 percent and 5 percent as an indication of a healthy economy.

But at the same time, the report shows 69 percent of poll respondents think the economy is weakening or in a recession, and 45 percent believe inflation will get worse in the next year. Additionally, 52 percent believe the next generation’s standard of living will be worse than their own.

By comparison, in December, a Detroit Regional Chamber’s Michigan voter poll reported 61 percent of respondents stated they are doing better or the same economically as before the pandemic, and 80 percent of employed respondents are not concerned about losing their jobs — yet.

The new report reveals consumer sentiment remains down, but people continue to spend strongly, spurring economic growth. Yet delinquency rates have been rising from historic lows in 2021, with credit card delinquencies continuing to grow and reaching levels last seen in 2012.

At the same time, individuals with higher educational attainment continued to experience lower levels of unemployment throughout 2023. Unemployment for individuals with a bachelor’s degree held steady at 2.0 percent, and for people with a high school diploma it was 4.3 percent.

The report also shows wages and salaries are up 4.1 percent year-over-year in the Detroit Region. Growth remains elevated despite leveling from the 2022 peak growth of 5.1 percent.

Last fall’s 46-day UAW strike against General Motors, Ford, and Stellantis affected more than 50,000 workers, 70 different facilities, and 23 percent of U.S. production, the report reveals.

Economic impacts of the strike were estimated to reach $10.4 billion, including $4.3 billion in lost earnings on production, $3.3 billion on lost wages and earnings to supplier companies and workers, and $2.9 billion in losses to dealers, customers, and ancillary auto industry workers.

Meanwhile, building permits in the Detroit region decreased 28 percent in 2023, compared to a national decrease of 12 percent. Home prices grew 6.3 percent in the third quarter of 2023 in the Detroit region compared to 2022 levels, surpassing the national growth rate of 3.6 percent.

Business applications in Michigan experienced the second-strongest year on record, remaining 56 percent over pre-pandemic application levels. Elevated business applications are in part due to federal investments, growth in women, Hispanic, and Black entrepreneurship, the rise of the gig economy, and shifts in consumer habits.

According to the report, U.S. CEO confidence is improving as leaders are optimistic interest rate hikes will end in 2024. About 73 percent project added revenue in 2024, up from 56 percent. And 63 percent expect a boost in profits, reversing a trend since mid-2023. About half of U.S. CEOs expect increases in capital expenditures after two months of declines.

Small business owners’ concerns about inflation remain the top challenge by far, according to the report. More than 50 percent of small businesses cite inflation as the most significant challenge they are facing, with no other concern coming close to this level – revenue (22 percent), rising interest rates (19 percent), or supply chain (17 percent). At the same time, manufacturing confidence continued to contract through 2023, after 30 consecutive months of growth.

When it comes to education, despite a 3.1 percentage point gain since 2018, the Detroit Region lags its peers and the nation in educational attainment. The labor force participation rate in Michigan demonstrated significant improvement throughout 2023, reaching a 14-year high of 62.2 percent. But job postings fell 39 percent year-over-year in the Detroit region as labor demands cooled.

The report states trends in workplace flexibility are here to stay as downtown Detroit workers remain 54 percent below 2019 levels.

And the Detroit region experienced lower levels of both office and industrial vacancy rates than the nation in 2023 — 11.4 percent versus 13.5 percent (office) and 3.8 percent versus 5.7 percent (industrial).

The chamber report also highlighted the state’s population growth issues. Today, Michigan ranks 49th in population growth, 37th in median household income, 37th in educational attainment, and 39th in labor force participation. Under Gov. Rick Snyder, the state often ranked in the top 10 among multiple categories.

The Detroit region ranks among 20 key peer regions. The area is 4th in young adult population growth (20-39 years), 19th in educational attainment, 15th in median household income growth, 16th in public transit performance, and first in homeownership rate under 30 years — the bright spot among key metrics.

The report broke down the region’s demographics. The Detroit region’s population was 65 percent white residents, with Black or African American residents accounting for 21 percent, and Latino or Hispanic and Asian residents at 5 percent each.

The region has a higher share of Black or African American population compared to the national share of 12 percent. Educational attainment and homeownership rates have increased for most racial and ethnic groups; however, disparities remain.

In June 2023, the Detroit Regional Chamber and Gallup Center for Black Voices released the Detroit Resident Voices Survey Report, which highlighted Detroiters’ daily experiences and perceptions, including topics related to well-being, education and employment, health and health care, access to social capital and social opportunities, neighborhood and living conditions, and crime and policing.

That report indicated 40 percent of Detroit city residents give life evaluations that classify them as thriving. And 39 percent of Detroit city residents are satisfied with the availability of good jobs at a time of low national unemployment. Finally, 51 percent are satisfied with the availability of quality health care in their area.

According to the 2024 report, the state lags in terms of infrastructure quality. Michigan received an overall grade of C-, up from the previous report grade of D+, on the 2023 Report Card for Michigan’s Infrastructure.

One-third of regional roads are in poor condition, with 24 percent in good condition – a 1 percent increase from 2021. In December 2023, the Detroit Regional Chamber Michigan Voter Poll reported that nearly 50 percent of Michigan voters consider the state’s infrastructure to be a disadvantage.

Electric vehicle (EV) investment, adoption, and charging infrastructure continue to grow in Michigan and the nation. More than 50 percent year-over-year growth in EVs – the fastest growing segments in the U.S. market in 2023.

U.S. EV market share reached 9.3 percent in 2023, up from 4.4 percent in 2021. Michigan ranks 24th in EV public charging stations per capita in 2022, up from 32nd in 2021.

“Despite our strong assets, including 18 Fortune 500 company global headquarters (nine in the Detroit Region alone), we continue to shallow against peer regions,” says Sandy K. Baruah, president and CEO of the Detroit Regional Chamber. “Key areas such as labor force participation and educational attainment continue to be challenges, as do equity gaps that harm both our economy and society – all of which can be tied in part to our state and Region’s lack of population growth.”

To watch a webcast about the findings or to view the report, visit here.