State economy will add jobs; U.S. economy
to continue on steady path
After four straight years of employment losses, Michigan's economy will add more than 130,000 jobs during the next two yearsmore than half in the service industry, according to a new U-M economic forecast.
"As 2005 unfolds, we anticipate steady improvement in the state labor market with job growth accelerating throughout the year," economist George Fulton says. "The job creation during the next two years is comparable to what was recorded during the 1999-2000 interval prior to the losses of the past four years."
In their annual forecast of the Michigan economy, Fulton and colleagues Joan Crary and Saul Hymans predict employment gains of 49,500 jobs during 2005 and 82,600 jobs during 2006. Since mid-2000, the state has lost more than 325,000 jobs.
Although Michigan's moderate job growth during most of next year will lag behind the national rate, employment gains in 2006 will outpace U.S. job growth (1.9 percent in the state vs. the nation's 1.8 percent). The state's unemployment rate will edge downward from the October rate of 6.6 percent to about 6.1 percent by the end of 2006though still higher than the national rate, the forecast says.
Service-industry jobs will account for about 60 percent of the job gains during the next two years.
A forecast of the nation's economy says America's post-election economy is primed for more growth in the next two years, although its expansion will not match that of the current year.
"The consensus is that this year will end up with a 4.4 percent growth ratethe third-strongest year of economic expansion in 20 years," says Hymans, professor of economics. "For the near term, the recent presidential election seems to have given a further boost to the already-positive economic attitudes that existed among households and businesses during the run-up to the election."
In their annual forecast of the U.S. economy, Hymans and colleagues Crary and Janet Wolfe predict 3.5 percent growth in national economic output (as measured by real Gross Domestic Product) next year and 3.8 percent in 2006.
The forecast is based on the Michigan Quarterly Econometric Model of the U.S. Economy and compiled by the U-M Research Seminar in Quantitative Economics. For more information, see http://rsqe.econ.lsa.umich.edu.