Business, education, and community leaders from around Oakland County, Michigan met in Troy last Thursday for the Oakland County Annual Economic Outlook Luncheon 2018. Representatives from JMJ Phillip Group were in attendance to monitor the economic pulse of the county and state. Oakland County Executive L. Brooks Patterson along with the Oakland County Department of Economic Development & Community Affairs teamed up with “respected University of Michigan economists [to] present their three-year forecast on the county’s economic future.” Presenters included Dr. Gabriel Ehrlich and Donald Grimes.
Ehrlich, the Associate Director of the Research Seminar in Quantitative Economics at U of M, held a positive outlook for the coming years in Oakland County. While the 1990s saw vigorous job growth, the next decade slingshotted back down and experienced over 150,000 lost jobs. Most of that 150,000 has been recovered since 2010 and last year the unemployment rate of 3.5% was 0.9% lower than the national average.
Wage growth is up across the board as well; jobs with salaries higher than $75k grew by 22.3%, between $35-75k by 15.4%, and lower than $35k by 24%. Ehrlich attributed the slower growth of the middle wage bracket to job loss in the government sector. The real GDP growth of the 1.25 million person county grew from 1.5% in 2016 to 2.3% in 2017 and Dr. Ehrlich believes that federal fiscal stimulus will be the main focus to continue that growth in the next several years.
Grimes, a senior research area specialist at U of M’s Economic Growth Institute and the assistant director of the Center for Labor Market Research, had more cautious views of the county’s economic future. He believes the greatest risk for the economy is a trade war resulting in 1400 lost jobs but the greatest local risk is exhausting the workforce before the 30,000 jobs lost before the recession are recreated. Grimes stated that the recession hit Oakland County harder than the rest of the state but recovery has also been stronger in the county and he predicts to see a record number of jobs in 2020.
Grimes then gave a breakdown of the county’s growth by industries. Although the government sector experienced job loss up until 2016, it is expected to slowly gain 1900 jobs over the next three years. The private sector is witnessing the fastest gains at 5.9% while the greatest gains are in professional and technical services, health care and social assistance, leisure and hospitality, administrative support, waste management, natural resources, mining, and construction. Grimes also believes the automotive sector will enjoy modest growth.
An unemployment rate of 3.4% is expected for this year and Grimes predicts a rate of 2.6% in 2020 which would be the lowest in the history of their data collection. With a well-educated workforce, low cost of living, and good leadership over the next few years both Grimes and Ehrlich see a prosperous economic future in Oakland County with real wage growth and lower unemployment.
By Jared Hoffman
Research Associate, JMJ Phillip Group