Area Economic Forecast

[vc_row][vc_column width=”1/4″][/vc_column][vc_column width=”1/2″][vc_column_text]Washtenaw County is poised for economic growth in 2014. After weathering the 5-year economic slump, the forecast for 2014 and into 2015 is encouraging.

Washtenaw County has a relatively strong economy compared to Michigan overall. The county is 720 square miles, has 27 cities, and hosts 350,000. The U.S. Census Bureau puts the median household income at $56,000 (compared to $47,000 for Michigan), and the median home value of $213,000 (compared to $137,000 for Michigan). Roughly 50% of adults have a bachelor’s degree or higher, (compared to 22% for Michigan).

And we can expect the county to continue to grow. George A. Fulton and Donald R. Grimes are researchers at the Institute for Research on Labor, Employment, and the Economy at the University of Michigan. In 2013, Fulton and Grimes prepared a report on Washtenaw County’s economic outlook through 2015.

In evaluating the county’s economic outlook, Fulton and Grimes paint an optimistic picture of the short-term by looking at two sides of the job coin: employment and unemployment.


Washtenaw County “turned the corner,” say Fulton and Grimes, in 2010 with roughly 12,000 jobs added since then. One of the most encouraging aspects of this job growth is that it has come in relatively high-wage jobs. Fulton and Grimes see this trend continuing for at least the next couple of years.

“We see a continued healthy recovery through 2015, extending its span to six years. Specifically, we are forecasting job growth of 3,619 in 2013, 4,361 in 2014, and 4,981 in 2015, cumulating to almost 13,000 job additions over the period 2012 to 2015—like the prior three-year period, an average gain of 2.2 percent per year. Washtenaw’s recovery through 2015 is supported by a U.S. economy that keeps a healthy pace of growth from mid-2013 through 2015.”

In fact, by 2015, Washtenaw County will reach a level above the 2002 peak the county reached before going into a 16,000-job freefall to its lowest point in 2009. From 2009 to 2015, though, the county is expected to add 27,000 jobs. “By the end of 2015,” say Fulton and Grimes, “county employment is over 11,000 jobs higher than it was in the third quarter of 2002—great news indeed for a county whose job market was in virtual free-fall only a few years ago.”

This job growth will come primarily from the private sector. Moody’s Analytics is a leading independent provider of data, analysis, modeling and forecasts on national and regional economies. According to Moody’s, Ann Arbor’s strengths are the strong presence of UM and EMU, life sciences and IT industries, and our highly educated population. However, one of our weaknesses, says Moody’s, is our reliance on federal support for tuition and research funding.

This weakness presents a concern, say Fulton and Grimes, and, consequently, job growth in this area will likely be slightly slower than in the private sector.

“Clearly, the University of Michigan and its health system have been the foundation for the region’s economic stability over the past decade. We are forecasting that they will continue to grow, albeit at a more subdued pace, but federal government spending cuts on research and health care pose a significant risk to that growth. The University of Michigan, including its health system, has been very successful in growing its slice of the federal research pie, but now that the pie is in danger of shrinking, the University will need to look increasingly to private-sector activity to sustain the growth in its academic research.”

Fulton and Grimes estimate just fewer than 4,000 government jobs added 2013 through 2015. Although this figure is just 5 percent added to the 72,000 government jobs in 2012, the growth represents a full 30% of the expected job growth of 13,000, so Washtenaw County is still quite reliant on the public sector for job growth.

For the 9,000 expected jobs added in the private sector in Washtenaw County during this 3-year period, about 1,500 are goods and manufacturing; 1,900 in trade, transportation, and utilities; 1,900 in professional and business services; 1,900 in private education and health services, 1,000 in leisure and hospitality; and another 600 in other private sector industries.


On the other side of the coin, Washtenaw County’s unemployment figure is expected to continue to drop.

According to Fulton and Grimes, “We are forecasting that the labor force ends a five-year slide in 2012, and thus the unemployment rate improves from then solely due to growing employment, ending the influence created by the exodus of discouraged workers.”

For 2014, this would put Washtenaw County at an unemployment rate of 4.8%, well below the 7.3% forecasted for the U.S. overall. This is a relatively low figure, but we must keep in mind that this is still above the 3.6% average unemployment rate that the county enjoyed from 1990 to 2007. Still, the 4.8% for 2014 does represent the first time the county will be below a 5% unemployment rate since 2007, so this is clearly encouraging.


Washtenaw County does not stand alone, however, and economic growth is increasingly being recognized as broader regional effect. The Detroit’s bankruptcy process, for example, is enabling a brighter future but is taking an economic and social toll that is felt by the broader Southeast region as a whole.

Acknowledging this need to connect across county lines in a cooperative regional perspective, Governor Snyder and his team came up with the Regional Prosperity Initiative last year. This initiative is a new concept that is part of the FY 2014 Executive Budget Recommendation and was signed into law as a part of the FY 2014 budget (59 PA 2013).

According to the Governor’s office, “Where local and regional collaboration is occurring, it often is cumbersome and is happening in spite of a structure that seems designed to dissuade it. Michigan needs to provide a structure that supports and encourages collaboration rather than discourages it.” The idea is to facilitate voluntary competitive grants designed to “encourage local private, public and non-profit partners to create vibrant regional economies.”

For Fiscal 2014, a $2.5 million fund was set aside for grants to cooperative groups with ideas on how to collaborate to grow the local regional economy, with the hope that this regional collaboration will spur growth for everyone in the counties involved.

“We’re investing in the success of our regions and their local communities,” said Governor Snyder in a statement. “This initiative does so in ways that are meaningful to the people who live, work and play there every day. We recognize that local partners – not Lansing – are best equipped to create strong regional strategies for prosperity. By supporting our local partners and their visions for vibrant economies, we can help put them in the best positions for long-term success. I appreciate the outstanding work of our local and regional partners from across the state who volunteered their time to help move Michigan forward.”

Governor Snyder and his team emphasize that job creators, local governments and nonprofit leadership all face stiff global competition, so we must collaborate across local units of government and individual counties to compete is this global market.

Washtenaw County is in Region 9, the Southeast Michigan Prosperity region. In the years to come, the ongoing growth of Washtenaw County may increasingly rely on the growth and collaboration of surrounding counties in this region. The Regional Prosperity Initiative is just the start of a more coordinated economic development approach that is expected to gain momentum.

Putting forecasts on what those longer-term collaborative efforts mean to Washtenaw County is difficult. For the short-term, though, Fulton and Grimes assure us that we can confidently expect that our county will move steadily ahead.

“This year’s economic outlook for Washtenaw County is very upbeat. First, the job recovery continues, adding another 13,000 jobs over the period 2012 to 2015 to the 12,000 jobs already in the bank after the first three years of recovery, from 2009 to 2012. The additional 25,000 jobs we anticipate in this six-year recovery period would trump any other stretch of six years since at least 1990.

“Second, the job gains over the interval are skewed toward the better-compensated end of wage scale. Third, Washtenaw is on the cusp of replenishing, in number, all of the jobs it lost since its previous peak in employment in mid-2002—in fact, overshooting that milestone by 11,000 jobs at the end of 2015. Fourth, the unemployment rate is projected to drop another 1.1 percentage points from calendar-year 2012 to calendar-year 2015.”[/vc_column_text][/vc_column][vc_column width=”1/4″][/vc_column][/vc_row]