ANN ARBOR, Mich., April 30, 2009 – Like the rest of Michigan and the United States, the Oakland County economy had a rough 2008 and is having an even worse 2009. But the outlook will get better, say University of Michigan economists.
In their annual forecast of the Oakland County economy, George Fulton and Don Grimes of the U-M Institute for Research on Labor, Employment, and the Economy say that Oakland will lose more than 25,000 jobs this year, after losing nearly 20,000 jobs last year.
However, the rate of decline slows in 2010, as Oakland is expected to lose about 10,500 jobs. By 2011, positive job growth will return, although the net gain will be only about 200 jobs.
But the primary risk remains that the outlook for the next two years could turn a bit more sour, depending on what transpires at General Motors and Chrysler in the next few months, Fulton and Grimes say.
“As with other localities in Michigan, it has been a rough ride for the Oakland County economy since the turn of the millennium,” Fulton said. “The bottom fell out in 2008 with the onset of the recession in the national economy, which by later in the year was evolving into the greatest economic crisis we have seen since the 1930s. But this year will be even weaker.
“However, Oakland’s economic fundamentals and forward-looking policy initiatives bode well for the county’s longer-term future, even while the region braces for more short-term challenges as the national recession deepens and the domestic automakers face the specter of bankruptcy.”
According to Fulton and Grimes, more than 60 percent of the job losses this year and next will be in the private service-providing sector. Professional and business services will lose more than 9,600 jobs this year and another 2,300 jobs in 2010, while jobs in trade, transportation and utilities will be down about 4,500 this year and 3,100 next year.
One-third of the job losses in 2009 and 2010 will be in the goods-producing industries, which make up about one-eighth of Oakland’s economy. About 9,000 jobs in goods will be lost this year, mostly in manufacturing (more than 7,300 jobs), with another 3,000 jobs (2,500 in manufacturing) eliminated in that sector in 2010.
In 2011, however, Fulton and Grimes predict that a few industries will show net job growth, including professional and business services (about 1,000 jobs) and even motor vehicle manufacturing (300 jobs).
The bright spot among the major industry categories throughout the forecast horizon is health care and social assistance, they say. Nearly 2,600 jobs will be created in this industry this year, another 1,800 next year and nearly 2,400 more jobs in 2011.
“The strength of health care as a source of jobs extends beyond the health care services industry itself to include medical equipment manufacturers and wholesalers, health and personal care stores, and scientific research and development,” Grimes said. “Oakland has recently introduced its Medical Main Street program to help brand the county as a center for the life sciences.”
Oakland County’s Emerging Sectors initiative, which has brought in new investment of more than $1.2 billion, also is encouraging, the U-M economists say. Growth is forecast for aerospace manufacturing, film production, specialized design and software publishing, as well as for more traditional industries such as commercial banking and securities.
“Some of the activities that show promise for growth also spotlight opportunities for other businesses to find new applications for their existing technologies,” Grimes said. “The county has recently set up workshops to aid this technology transfer.”
In spite of the worst economic environment in a generation, Oakland County can still lay claim as one of the premier local economies in the entire United States—as evidenced by its status as only one of 49 counties among more than 3,100 nationwide with a bond rating of AAA.
“Despite years of economic turmoil that have clobbered southeast Michigan, Oakland County has remained one of the most prosperous counties in the country, with many quality-of-life advantages,” Fulton said. “More important, it has the necessary assets to remain a prosperous and welcoming county in the future.”
The 24th annual U-M forecast of Oakland County’s economy was sponsored by several Oakland County organizations. Its presentation was hosted by the county’s Department of Economic Development & Community Affairs, Chase and Oakland Community College.