Tag Archives: Detroit Economy

Southeastern Michigan’s Economy Shows Signs of Slowing Down, as does Inflation

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Michigan’s unemployment rate has been slowly increasing over the last few months, a trend which the City of Detroit is also experiencing but at a more increased rate. According to Michigan Department of Technology, Management and Budget, Michigan’s unemployment rate was reported at 4.5 percent in September of 2024. This unemployment rate has gradually increased for 3.9 percent since May of 2024. 

In Detroit, the September 2024 unemployment rate was reported at 8.9 percent. This was a decrease from the 13.9 percent unemployment rate spike in July of 2024, however, in April of 2024 the unemployment rate for Detroit was 7.4 percent and it has continued to increase since then. 


According to a recent Detroit Free Press article, there are several reasons for the increased jobless rates, including inflation, lack of interested people to fill open positions and the fact that some major Michigan employers have been cutting back on positions. For example, last week General Motors announced about 1,000 layoffs and since August Stellantis has cut about 2,850 positions. There are fields that are growing though. The construction industry in Michigan has experienced about an 8 percent increase in jobs and there has been about a 3 percent increase in government jobs.

When comparing the unemployment rates of the seven counties in Southeastern Michigan between September of 2023 and September of 2024 the data shows that unemployment rates have increased for almost all counties over the last year. Livingston County was the only county where the unemployment rate remain unchanged; the reported unemployment rate was 3 percent. Wayne County not only had the highest unemployment rate in September of 2024 at 5.6 percent but it also had the largest increased from the year prior. Between September of 2023 and September of 2024 Wayne County’s unemployment rate increased 1.6 percent.

When comparing the unemployment rates of the seven counties in Southeastern Michigan between September of 2023 and September of 2024 the data shows that unemployment rates have increased for almost all counties over the last year. Livingston County was the only county where the unemployment rate remain unchanged; the reported unemployment rate was 3 percent. Wayne County not only had the highest unemployment rate in September of 2024 at 5.6 percent but it also had the largest increased from the year prior. Between September of 2023 and September of 2024 Wayne County’s unemployment rate increased 1.6 percent.

The charts below show the percent changes in the Consumer Price Index (CPI) on a month-to-month basis and a year-to-year basis for each month in years 2019, 2020, 2021, 2022, 2023 and 2024 in the Midwest Region. The CPI is a measure that examines the weighted average of prices of consumer goods and services, such as transportation, food, energy, housing and medical care. It is calculated by taking price changes for each item in the predetermined group of goods and averaging them.

The first  chart below highlights how the CPI changed on a month-to-month basis between 2019 and 2024. Currently in 2024, the region’s prices were up 0.2 percent in the month of August. The highlights for the change include:

  • Overall food prices increased by 0.4 percent, but the price of meat, fish, poultry and eggs increased 1 percent and the price of fruits and vegetables increased by 1.1 percent
  • The energy index decreased by 2.4 percent.
  • The cost of transportation decreased by 0.7 percent, and the cost of motor fuel decreased by 5.5 percent. 

When examining the second chart, which shows how prices changed on a year-to-year basis,  we see how prices remain lower than this point in time in 2021, 2022 and 2023.

In September of 2024 the CPI was reported to be 2.5 percent above what it was the year prior. Contributing factors to the continued increase in the CPI include:

  • Food and beverage prices increasing 2.4 percent over the last year, with away from home food prices increasing 3.9 percent and food at home increasing 1.3 percent.
  • Housing increasing 4.9 percent, with rent increasing 4.9 percent and the equivalent of rent increasing 5.2 percent.
  • The cost of transportation decreased by 1.1 percent, with motor fuel decreasing 15.5 percent and motor vehicle insurance increasing 16. percent. 

 Home prices in Metro-Detroit for 2024 are again higher than in years’ past, with gradual increases occurring from month-to-month. In August of 2024, the average price of a single-family dwelling sold was $188,7600, according to the Case Shiller Index. In July of 2024, the average price of single-family dwellings sold was $188,000, which is $760 a difference from the month prior. While there was an increase, it is much lower than what we have seen in months’ and years’ past. However, the year-to-year comparison does show home prices continue to increase at high rates.

 Between August of 2024 and 2023 the average price of a single-family dwelling increased $10,570; between August of 2024 and 2022 the price increased $17,350, between August of 2024 and 2020 the average price has increased $54,640 and between August of 2024 and 2014 the average price has increased $90,040.

Building permits reached an annual peak in June of 2024 and then decreased for the remainder of the summer. The number of single-family dwelling building permits pulled in August of 2024 was 277. The last time fewer single-family dwelling permits were pulled was in January of 2023; 187 were pulled at that time. Despite the fewer number of building permits pulled, there was a call from the Governor to earlier this year to build more. 

Thirty-Five Southeastern Michigan Communities Identified as Disadvantaged Due to Environmental Burdens

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There are 35 communities in Southeastern Michigan described as Justice40 communities by local, state and federal government agencies because they have Census tracts that face underinvestment and have higher rates of pollutants than their neighboring communities.  Throughout the United States there are  27,251 Census tracts that are identified as disadvantaged by the Climate and Economic Justice Screening Tool (.gov) (CEJST). CEJST identifies census tracts as disadvantaged if they meet the threshold for environmental and/or climate burdens, along with an associated socio-economic burden.

With communities across the nation facing such disadvantages, President Joe Biden signed several Executive Orders into law that focus on helping such disadvantaged areas tackling climate change and addressing environmental injustices through dedicated funding and priorities.

The Justice 40 initiative sets a goal for federal and state investment in pollution remediation and reduction, climate change mitigation, and sustainability while ensuring that 40 percent of related federal investments reach disadvantaged communities, including to the 35 Justice40 communities in Southeastern Michigan. These 35 communities with identified disadvantaged Census tracts are: 

As noted, the CJEST tool helps to identify which Census tracts, and communities, that are deemed disadvantaged because they meet the threshold for environmental and/or climate burdens, along with an associated socio-economic burden.These burdens, and the criteria that helps determine if a community/Census tract are disadvantaged are described below, per the CEJST.

Climate change: at or above the 90th percentile for expected agriculture loss rate OR expected building loss rate OR expected population loss rate OR projected flood risk OR projected wildfire risk;

Energy: at or above the 90th percentile for energy cost OR PM2.5 in the air;

Health: at or above the 90th percentile for asthma OR diabetes OR heart disease OR low life expectancy;

Housing: Experienced historic underinvestment OR are at or above the 90th percentile for housing cost OR lack of green space OR lack of indoor plumbing OR lead paint;

Legacy pollution: have at least one abandoned mine land OR Formerly Used Defense Sites OR are at or above the 90th percentile for proximity to hazardous waste facilities OR proximity to Superfund sites (National Priorities List (NPL)) OR proximity to Risk Management Plan (RMP) facilities;

Transportation: at or above the 90th percentile for diesel particulate matter exposure OR transportation barriers OR traffic proximity and volume;

Water and wastewater: at or above the 90th percentile for underground storage tanks and releases OR wastewater discharge;

Workforce development: at or above the 90th percentile for linguistic isolation OR low median income OR poverty OR unemployment and have more than 10 percent of people ages 25 years or older whose high school education is less than a high school diploma.

Additionally, all categories (except workforce development) include the criteria that the Census tract is at or above the 65th percentile for low income.

The map below is a screenshot from the Equity Emphasis Tool created by the Southeastern Michigan Council of Governments, which shows communities/Census tracts that meet the threshold for environmental and/or climate burdens, per the CEJST. The map also highlights the equity, and inequity, of the region based on criteria such as income, race, sex, disability, education, access to transportation and age.The areas highlighted in blue are the census tracts deemed as disadvantaged because they meet the threshold for environmental and/or climate burdens, along with an associated socio-economic burden.

 

The first map above does show that the number of areas deemed disadvantaged by the CEJST map expands beyond the areas with high Equity Emphasis index scores. This is likely because the Equity Emphasis index scores are based on socioeconomic data while the CEJST designations also look at environmental factors, such as potential flood and wildfire risks of an area and proximity to underground storage tanks.

Detroit, its inner-ring suburbs and the City of Pontiac are highlighted in both the CEJST and Equity Emphasis maps, again highlighting how socioeconomic data impacts policy decisions, or lack thereof, related to the environment.

While the data above highlights where the focus areas of the Justice40 Initiative are, it is also important to understand what type of investments will be made in these areas.

The categories of investment are: climate change, clean energy and energy efficiency, clean transit, affordable and sustainable housing, training and workforce development, remediation and reduction of legacy pollution, and the development of critical clean water and wastewater infrastructure.

Moving forward we will carefully dig into the specifics of what criteria have made some Southeastern Michigan’s communities Justice40 Communities, and what funding they are receiving to mitigate future social, economic and environmental injustices.

Metro-Detroit CPI Rises and New Builds Decline

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Michigan’s unemployment rate continues to remain stable and below 5 percent, a trend that has occurred since June of 2022. In January of 2024, the State of Michigan’s unemployment rate was 4 percent. While this a good sign, Michigan Labor Market Information Director Wayne Rourke was recently quoted in a Michigan Public Radio article saying that the job market in Michigan is beginning to cool off. He did add though that the job market is still good.

In Detroit, the 2023-2028 Economic Outlook produced as part of the City of Detroit-University Economic Analysis Partnership between U of M, the City of Detroit, Michigan State University and Wayne State University, shows even more optimism. According to report, payroll jobs are expected to increase by 3,000 in 2023 and by 8,900 from now until 2028. Such growth will is expected to decrease Detroit’s unemployment rate to 7.2 percent in 2028. Detroit’s unemployment rate was 8.2 percent in January of 2024, which was a slight increase from where it was in November and December of 2023.

When comparing the unemployment rates of the seven counties in Southeastern Michigan between January of 2023 and January of 2024 we again see signs of economic optimism, with unemployment rates being down or remaining stable for all seven counties. Monroe County had the largest decrease in its unemployment rate between January 2023 and January 2024 at 0.7 percent; it also had the highest unemployment rate in January of 2023 at 4.9 percent. In January of 2024, Wayne County had the highest unemployment rate at 4.7 percent, which is what it was the year before too. Washtenaw County had the lowest unemployment at 2.9 percent in January of 2024.

The charts below show the percent changes in the Consumer Price Index (CPI) on a month-to-month basis and a year-to-year basis for each month in years 2019, 2020, 2021, 2022, 2023 and 2024 in the Midwest Region. The CPI is a measure that examines the weighted average of prices of consumer goods and services, such as transportation, food, energy, housing and medical care. It is calculated by taking price changes for each item in the predetermined group of goods and averaging them.

The first  chart below highlights how the CPI changed on a month-to-month basis between 2019 and 2024. Currently in 2024, the region’s prices were up 0.6 percent in the month of February. The highlights for the change include:

•Overall food prices remained unchanged, but the price of meat, fish, poultry and eggs increase 0.5 percent.

•The energy index increased by 4 percent over the month, due almost entirely to an increased price in gasoline (8 percent). There was a 1.5 percent increase in natural gas services too though.

•Rent (+0.4 percent) and apparel (+ 3.1 percent) also contributed to the increase in the month-to-month CPI increase. This increase was slightly offset by the 0.9 percent decrease in medical care services though.

When examining the second chart, which shows how prices changed on a year-to-year basis,  we see how the CPI advanced by 2.8 percent from the last year.

In January of 2024 the CPI was reported to be 2.8 percent above what it was the year prior, meaning consumer prices continue to rise. Contributing factors to the continued increase in the CPI include

•Food prices increasing 2.2 percent over the last year, with “away from home” food prices increasing 3.9 percent

•The cost of electricity decreased by 5.1 percent, with the 11.3 percent decline in the price of natural gas slightly offsetting the 4.5 percent increase in prices paid for electricity.

•Owners’ equivalent rent of residences increasing 6.5 percent and rent of primary residence increasing 6.3 percent.

Home prices in Metro-Detroit for 2023 again set a record. In December of 2023, the average price of a single-family dwelling sold in December of 2023 was $182,890, according to the Case Shiller Index. In January of 2023, the average price of single-family dwellings sold was $168,300, which is a $14,590 difference from what the average prices were at the end of the year. While average home prices during the first six months of 2023 remained on par with what they were in 2022, the data shows that price began to increase again in latter part of the year.

Between December of 2023 and 2022 the average price of a single-family dwelling increased $13,400; between December of 2023 and 2020 the price increased $41,230 and between December of 2023 and 2014 the average price has increased $85,900.

With the cost of home prices increasing, it also appears the number of building permits being pulled in Southeast Michigan have been declining overall since 2021. The number of single-family dwelling building permits pulled in March of 2021 was the peak between then and now. At that time, 618 single-family dwelling building permits were pulled. The highest number of single-family dwelling building permits pulled in 2023 was 494 (March, 2023). While Michigan Gov. Gretchen Whitmer said in her 2024 State of the State address that we need more housing to decrease the cost to purchase/rent a home, building is actually declining.

According to a February 2024 Detroit Free Press article, some reasons for the decline in building new single-family dwelling units are the cost to build, modest statewide population growth and a shortage of skilled trade workers. Also, increased costs to build a home means those homes cost more to purchase, which is also proving to be difficult in today’s economy.

Proposed Michigan Water Affordability Bill Meets Opposition

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Access to clean water and the ability to afford it is boiling over to a new proposal to help households with their water bills. Recently, Democratic lawmakers in the Michigan House of Representatives and the State Senate introduced bills that, if passed, would create a statewide affordability fund for low-income residents to access. The fund would be created by charging a $2 monthly fee to water customers across the state.

This proposal, discussed in detail below, is now drawing fire from Macomb County leaders and Republicans who say it will primarily benefit Detroiters.

 According to a bill analysis by the Senate Fiscal Agency (SFA), the estimated amount collected in the proposed water affordability fund, assuming  all 2.5 million retail water meters in Michigan were subject to the $2 per month funding factor fee would be $90 million. When the fund reaches $90 million, 3 percent of the monies, or $2.7 million, could be allocated for administrative costs associated with the program. The remainder of that assumed initial balance, $87.3 million, would be available for:

  • Actual administrative costs of the water providers, which would be limited to 15 percent of the balance in the Fund which after 18 months could be estimated at $13.1 million;
  • Payment or advancement to providers for income-based bill discounts; income-based bill caps, or income-based rates;
  • Arrearage payments;
  • Water loss mitigation programs.

Those eligible to benefit from this program would be customers who had a household income of up to 200 percent of the Federal Poverty Guidelines or who was eligible for certain assistance programs. Eligible customers for this program, which would be housed under the Michigan Department of Health and Human Services, would not pay more than 3 percent of their household income on a water bill.

This program has been lauded by some and opposed by others. In recent weeks, Detroit Mayor Mike Duggan, the Oakland County Board of Commissioners, Oakland County Executive David Coulter, Royal Oak, Harper Woods and Warren officials, Oakland County Water Resource Commissioner Jim Nash and Wayne County Deputy County Executive Assad I. Turfe have come out in support of the bills to create this fund. Area organizations, such as the United Way of Southeastern Michigan, Clean Water Action, the Sierra Club Michigan Chapter and American Waterworks Association, have also come out in support of the proposed bills. Supporters of these bills have discussed how water affordability is a human right, and these programs will allow that human right to continue for thousands of households.

Macomb County Public Works Commissioner Candice Miller is the most vocal official against the bills, stating it would only increase water bills for customers and that there already is access to water affordability programs. She says it will primarily benefit Detroiters. Seventeen Macomb County communities agree with Miller and have passed resolutions opposing the bills that could create the statewide water affordability programs. Those 17 communities are:

  • Armada (Village)
  • Bruce Township
  • Center Line
  • Chesterfield Township
  • Clinton Township
  • Fraser
  • Harrison Township
  • Memphis
  • Mount Clemens
  • Lenox Township
  • Macomb Township
  • New Haven
  • Roseville
  • Shelby Township
  • St. Clair Shores
  • Sterling Heights
  • Washington Township

The Macomb County Board of Commissioners also voted to take a stance against the bills, and ultimately the proposed fund.

According to Miller, water affordability programs, such as the Water Residential Assistance Program (WRAP) administered by the Great Lakes Water Authority (GLWA) are not fully used as is. The counter argument to this is that programs such as WRAP offer short-term support for those in need of assistance and other programs, such as the Detroit Water and Sewerage Department’s Lifeline Plan, have a one-off funding mechanism (ARPA) funds, and more sustainable funding mechanisms are needed. Additionally, there is no statewide assistance program, rather there are various affordability programs depending on the water provider and the location of the ratepayer. There are worries though that the proposed state affordable water fund would primarily support Detroit residents, according to a January, 2024 C&G News article.

According to the proposed bills, eligible customers are households whose income does not exceed 200 percent of the Federal poverty guidelines or who meets any of the following requirements:

  • Has received assistance from a State Emergency Relief Program within the past year.
  • Receives food assistance under the Federal Supplemental Nutrition Assistance Program (SNAP) administered by State.
  • Receives medical assistance administered under the Act. Receives assistance under the Michigan Energy Assistance Program.
  • Receives assistance under the Special Supplemental Nutrition Program for Women, Infants, And Children (WIC). Receives supplemental security income
  • Receives assistance under the Weatherization Assistance Program.

According to the Michigan Department of Health and Human Services, in 2020 more than 317,000 Michigan households were behind on their water bills and facing shutoffs. Furthermore, if looking at eligibility requirements as set out by the proposed bills, there were 309,101 families in Southeastern Michigan who were living at least 200 percent of the poverty level and 190,113 households with Supplemental Security Income (SSI), cash public assistance income, or Food Stamps/SNAP benefits in 2022, according to the US Census Bureau.

According to the Census data, Wayne County had the highest number of families living at least 200 percent below the poverty level at 133,492, followed by Macomb County at 44,218 and Oakland County at 41,037. Looking at the total number of families in Southeastern Michigan who live at least 200 percent below the poverty level, minus Wayne County, there are 124,568. In total, there are 258,060 families living 200 percent below the poverty line in Southeastern Michigan and 48 percent of those families live in either Livingston, Macomb, Monroe, Oakland, St. Clair or Washtenaw counties. Furthermore, with there being 309,101 total families in Michigan that live 200 percent below the poverty line, Wayne County families account for less than half that total.

When looking at the number of families who received Supplemental Security Income (SSI), cash public assistance income, or Food Stamps/SNAP benefits in 2022 it was Wayne County that had the highest number of households, by far, at 47,646. Macomb County had the second highest number of households at 18,792 and Oakland County had the third highest number of households at 16,100. In Michigan in 2022 there were 190,113 families who received some type of assistance and Southeastern Michigan families make up 50 percent of that number.

So, while those who oppose the proposed bills claim the funds from the statewide water bill support program would primarily be filtered to Detroiters, the data shown above tells a different story.

The numbers certainly show there are families who are likely in need of utility bill support and $24 a year per household could go a long way for many. However, annually that number can increase by up to 10 percent to a maximum of $3 per retail water meter per month, according to the Senate Fiscal Agency bill analysis. If these bills are to become law and the program is created there needs to be strong program support, ensuring those in need and eligible for the program are aware of the benefit and have assistance in applying for the benefits. The monies, if charged to ratepayers, need to be used to support those in need throughout the state and ensure access to clean and fresh water.

Michigan’s Minimum Wage Increases, Changes Could Still Be Coming

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Michigan’s minimum wage increased to $10.33 on Jan. 1, 2024, in accordance with the Improved Workforce Opportunity Wage Act of 2018. Under the law as it currently stands, the minimum wage is set to increase to $12.05 an hour by 2030, depending on the state’s unemployment rate. Furthermore, the tipped wage rate will increase to $3.93 an hour. Depending on a Michigan State Supreme Court ruling though, the hourly rate improvements could shift.

In 2018 a petition to increase Michigan’s minimum wage to $12 by 2022, while also accounting for inflation, received 280,000 signatures from voters. The Republican-led Michigan Legislature at the time adopted the language of the petition but then amended the language. These amendments slowed plans to increase Michigan’s minimum wage and also eliminated the plan to eventually eliminate the lower tipped wage in restaurants, instead maintaining the wage rate at 38 percent of the full minimum wage. This issue has been in Michigan Courts, with the focus specifically being on the legality of the legislature adopting petition language and then amending it. The Michigan Court of Appeals issued an opinion ruling that found the Michigan Legislature did not act unconstitutionally when it adopted petition language and amended in the same session in 2018. This opinion has been appealed and the issue is now being taken up by the Michigan Supreme Court.

As is shown in the chart below, Michigan’s minimum wage has been steadily increasing since 2015 when it was $8.15 an hour. Prior to that it plateaued at $7.40 an hour between 2009 to 2013. Michigan’s minimum wage also remained stagnant between 1998 and 2006, 1981 to  1997, 1976 to 1978, 1972 to 1975 and 1968 to 1971, according to the Federal Reserve Bank of St. Louis.

In theory, increasing the minimum wage will also increase the earnings of most low-wage workers. With a minimum wage of $10.33 an hour in 2024, a full-time worker earning that wage could make about $21,400 a year, assuming they worked 40 hours a week for a full year. This would be an increase, if making the same assumptions, from an annual salary of about $20,500 a year with an hourly rate of $10.10 (2023 minimum wage).  According to the US Census Bureau, less than 10 percent of households in each county in Southeast Michigan made between $15,000 and $24,999 a year in 2022. So, even with a minimum wage increase, many of those households earning below $25,000 a year will remain under that threshold. This is a threshold that is below the poverty level for a family of four.

According to Healthcare.gov, an individual earning $13,590 or below in 2022 was considered to be living at or below the poverty level, this number increased to $14,580 in 2023. For a family of four the poverty level was $27,750 in 2022 and $30,000 in 2023.

In 2022, the year for which the most recent data is available, Wayne County had the highest percentage of households living at or below the poverty level in the seven-county region at 20.2 percent. Monroe, St. Clair and Washtenaw counties were the only other ones in the region with more than 10 percent of households living at or below the poverty level. Wayne County also had the highest percentage of households earning between $15,000 and $24,999 a year at 9.3 percent. Furthermore, Wayne County had the lowest median household income in the region at $55,867. Livingston County had the lowest percentage of households living at or below the poverty level in 2022 at 4.9 percent and had the highest median income at $100,139.

So, while the minimum wage increased in Michigan, and helping those with among the lowest earnings in the state, the gap between the minimum wage and a living wage still exists. A living wage is the hourly rate that an individual in a household must earn to support his or herself and their family. According to the Massachusetts Institute of Technology, $16.27 an hour is the amount an individual needs to earn to make a living wage.

An increased minimum wage not only increases the earnings of some of Michigan’s lowest earning workers, but it also has been shown to have positive impacts on physical and mental health, well-being and educational outcomes.

Housing Prices Begin to Stabilize, CPI Takes A Dip in Metro-Detroit

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Michigan’s unemployment continues to decrease, for the tenth straight month, and the labor force in the state continues to grow. This year is looking much rosier than in 2020 when great uncertainty riddled the state, and the country. With job recovery following the peak of the pandemic, and an increase in revenues from the sales and use tax and federal funding the state is predicting about a $5 million surplus. While such a surplus can viewed as a sign of improved economic times, we must also recognize inflation is on the rise, and uncertainty still looms with COVID and the war in Ukraine. Recognizing that inflation is hitting the homes of most, if not all, Gov. Gretchen Whitmer was proposed sending $500 to working Michigan families in attempt to help ease the strain on our pockets. The Republic led majority legislature is discussing a $2.5 billion plan that would cut taxes. What will happen remains unknown, especially as the project surplus is just an estimate.

But the data below does tell that story that Michigan’s economy is on the rise while the costs of goods and services is also on the rise.

The chart below provides a more detailed look at how unemployment rates are currently, compared to year ago, at the local level. Across all seven counties in Southeastern Michigan unemployment rates were lower in July of 2022 as compared to July of 2021. Wayne County experienced the largest decrease in that year, with the unemployment rate decreasing by 4.9 percent. While Wayne County had the highest unemployment rate in the region in July of 2021 (9.6%), it did not have the highest rate in July of 2022. Rather, Monroe County currently had the highest unemployment rate in the region in July of 2022 at 5.4 percent. Livingston County continued to have the lowest unemployment rate in the region at 2.2 percent.


The charts below show the percent changes in the Consumer Price Index (CPI) on a month-to-month basis and a year-to-year basis for each month in years 2019, 2020, 2021 and 2022 in the Midwest Region. The CPI is a measure that examines the weighted average of prices of consumer goods and services, such as transportation, food, energy, housing and medical care. It is calculated by taking price changes for each item in the predetermined group of goods and averaging them.

The first  chart below highlights how the CPI changed on a month-to-month basis between 2019 and 2022. Currently in 2022, the region’s prices were down 0.2 percent. The highlights for the change include:

•Food prices increasing 1.2 percent for the month of July (prices for food at home increased 1.5 percent while prices for food outside of the home increased by 0.8 percent)
•Gas prices declining 8.8 percent, which contributed to the energy index decline of 5.7 percent
•Overall, prices without considering food and energy prices, rose by 0.3 percent from the month prior.

When examining the second chart, which shows how prices changed on a year-to-year basis,  we see how prices remain higher than previous years but that there was a decline in the CPI for the month of July between 2021 and 2022.

In July of 2022 the CPI was reported to be 8.6 percent above what it was the year prior (this is lower than the 9.5 percent increased experienced between June of 2021 and 2022). Contributing factors to the continued increase in the CPI include:

•Food prices increasing 12.4 percent over the last year
•Energy prices increasing 34.1 percent over the last year.
•New and used motor vehicles increasing 8.4 percent
•And household furnishings and operations increasing 10.8 percent.
While home prices in Metro-Detroit continue to increase from one month to the next, the rate at which they are increasing is beginning to taper off. According to the Case-Shiller Home Price Index, the average price of single-family dwellings sold was $172,560 in July of 2022; this was a mere $170 higher than the average family dwelling price in June. While the month-to-month increase has slowed down, a look at data from year’s prior is a reminder just how much the average price of a home has increased. Between July of 2022 and 2021 the average price increased $19,960 and between July of 2022 and 2014 the price increased $75,220.


Unemployment Rates Leveling Off, Consumer Consumption Increasing

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In March of 2021 the unemployment rates for the State of Michigan and for the City of Detroit continued to a decline, which is a more recent trend. The State of Michigan reported an unemployment rate of 5.2 in March, which is the same at its February rate. However, since December of 2020 the State’s unemployment rate declined from 7.3 to 5.2.  For the City of Detroit, the unemployment rate for March of 2021 was 9.3, which is 0.3 points lower than the February unemployment rate and 11 points lower than the December 2020 rate. Both the Michigan and the Detroit rates were similar to the January 2020, pre-pandemic rates.

The chart above shows unemployment rates beginning to level off and the chart below reflects a similar message for some counties. Livingston, Macomb, Oakland and Wayne counties all reported higher unemployment rates in March of 2020 than March of 2021. In March of 2020 St. Clair County had the highest unemployment rate of 5.9, followed by Wayne County with an unemployment rate of 5.7.  Washtenaw County had the lowest unemployment rate in March 2020 at 2.7, but by March of 2021 that increased to 4.3. Washtenaw and Monroe counties were the only two in the region with higher unemployment rates in March of 2021 than March 2020. Both Monroe and Wayne counties had the highest unemployment rates in March of 2021 at 5.6. Livingston County had the lowest unemployment rate in March of 2021 at 3.2.

Just as the unemployment rate in the region is declining, so is the number of continued unemployment claims. These claims, also referred to as insured unemployment, are the number of people who have already filed an initial claim and who have experienced a week of unemployment and then filed a continued claim to claim benefits for that week of unemployment. Continued claims data are based on the week of unemployment, not the week when the initial claim was filed, according to the Southeastern Michigan Council of Governments.

The chart below shows a spike in April and May of 2020, when COVID restrictions tightened throughout the State. Since then though there has been a steady decline in the number of continued claims. The largest declines occurred between May and June of 2020 and September and November of 2020. Although there have been some increases in the number of continued unemployment claims since November of 2020, the April 10, 2021 number of 102,721 unemployed claims is the lowest number of claims in over a year.

Although unemployment numbers have been on the decline, there has been a recent increase in the number of small business closures, according to the Opportunity Insights Economic Tracker. This source uses credit card transaction data from 500,000 small businesses, Opportunity Insights estimates closures from the number of small businesses not having at least one transaction in the previous three days. The data cover many industries, including healthcare services, leisure and hospitality, and retail and transportation. The date source does says it has less coverage in manufacturing, construction, and finance.

According to the data, 31 percent of small businesses closed as of May 1, 2021. This number was an increase from the 26 percent of small business that were estimated to be closed on April 23, 2021. 

Since April of 2020 the percentage of small business closures has increased, but those numbers are not as high as when the pandemic began.

Below shows the consumption expenditures of goods in the U.S. between 2019 and 2021. According to the U.S. Bureau of Economic Analysis, durable goods have an average useful life of at least 3 years (e.g. motor vehicles) while nondurable goods have an average useful life of less than 3 years (e.g. food) and services are commodities that cannot be stored or inventoried and are consumed at the time of purchase (e.g., dining out). The chart below shows how consumption of services continues to remain steady, but not back to pre-COVID levels. On March 1, 2021 it was estimated that there was $8,182 billion in consumption of services, a slight increase from the month prior but below the January 1, 2020 levels.

The expenditures on durable and non-durable goods are now increasing above pre-COVID levels with the amount spent on durable goods being $2,314 billion as of March 1, 2021 and the amount spent on non-durable goods being $3,342 billion.

According to the Case-Shiller Home Price Index, the average price of single-family dwellings sold in Metro Detroit was $148,500 in February of 2021; this was $1,500 higher than the average family dwelling price in January. The February 2021 price was an increase of $14,070 from February of 2020 and $49,430 from February of 2014. Home prices have continued to increase year-after-year but the recent average price of single-family dwellings sold in the Metro-Detroit area has increased at a higher rate than in previous years.  

Economic Indicators: Unemployment Rates, Housing Costs Remain Higher than Pre-COVID

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We are a year into the COVID pandemic, unemployment rates have peaked and then declined, but they are still substantially higher than a year ago. Average home prices have increased as demand for homes has increased. Broader consumption trends though, while they are faring better than nearly a year ago, have yet to fully recover to pre-pandemic levels. Below we show just how these various indicators have changed over the last year.

In December of 2020 the unemployment rates for the State of Michigan and for the City of Detroit continued to increase after declines following the initial unemployment spikes due to COVID-19. The State of Michigan reported an unemployment rate of 7.3 in December, a higher rate than what was reported in November, which was 6.3. For the City of Detroit, the unemployment rate for December of 2020 was 20.3, which is higher than the November rate of 18.7. The December unemployment data further highlights how the unemployment gap between the State and Detroit continues to grow wider as the COVID case numbers increased rapidly over the holidays.

In line with what was reported above, COVID impacted unemployment rates at the county level in Michigan as well. In December of 2020 each county in Southeastern Michigan had a significantly higher unemployment rate than the year prior. According to data from the Michigan Department of Technology, Management and Budget, Wayne County experienced the largest increase at about 8 points. In December of 2020 Wayne County had an unemployment rate of 12.4 and in December of 2019 it was 4.5. Washtenaw County experienced the smallest increase at 1.5 points. In December of 2020 Washtenaw County had an unemployment rate of 3.6 and in December of 2019 it was 2.1. While there were overall unemployment increases, the differences in the unemployment percentages between each county is, at least in part, dependent on the type of jobs available in each county and the occupations of residents. For example, in Wayne County the top occupations are office and administrative support, production and sales and food service. In Washtenaw County the top occupations are office and administrative support, education instruction, health care practitioners and food service workers. Throughout much of the year some positions related to office and administrative support and food service have been considered non-essential or experienced higher layoff rates while those in health care and education have been at less risk of being unemployed.

The Bureau of Economic Analysis recently released data on the per capita personal income by county for 2019, showing that overall incomes in Southeastern Michigan did grow between 2018 and 2019. In 2019 Oakland County had the highest per capita personal income at $72,271 but it had the lowest percent change between 2018 and 2019 at 2.7 percent.  Wayne County had the lowest per capital personal income at $44,512 with the percent change from the year prior being 3.3 percent. St. Clair County had the lowest percent change in per capita income between 2018 and 2019 and 2.7 percent; its per capita personal income in 2019 was $45,662.

When examining personal income growth between 2017-18 and 2018-19 the percent change was lowest for the most recent year of data, as opposed to the growth from between 2017-18.

We have yet to know what the impact COVID will have on personal income for 2020, but the data below does show that growth was already beginning to slow down prior to the pandemic. That coupled with higher rates of unemployment, business closures and decreases in spending on goods and services may very well mean lower personal incomes for 2020.

The automobile industry continues to be a driving force in Michigan’s economy and the latest data on vehicle sales show that the number of auto sales for lightweight vehicles has been steadily increasing in recent months while light truck and car sales slightly declined in February of 2021. However, compared to a year ago, sales still remain below what they were. In February of 2021 auto sales for: sales of light weight vehicles were 16.5 million, compared to 16.8 million the year prior; light truck sales were 12.3 million compared to 12.5 million in February of 2020; car sales were 3.4 million, compared to 4.2 million the year prior.

Below shows the consumption expenditures of goods in the U.S. between 2019 and 2021. According to the U.S. Bureau of Economic Analysis, durable goods have an average useful life of at least 3 years (e.g. motor vehicles) while nondurable goods have an average useful life of less than 3 years (e.g. food) and services are commodities that cannot be stored or inventoried and are consumed at the time of purchase (e.g., dining out). The chart below shows how services have yet to make it back to the pre-COVID consumption levels, but the consumption of durable and non-durable goods have risen. In January of 2021 $8,016 billion in services was consumed, $2,148 billion in goods was consumed and $3,206 billion in nondurable goods was consumed.

According to the Case-Shiller Home Price Index, the average price of single-family dwellings sold in Metro Detroit was $139,240 in November of 2020; this was $145 higher than the average family dwelling price in October. The November 2020 price was an increase of $11,770 from November of 2019 and $15,200 from November of 2018. So, just as unemployment rates remain higher than what they were a year ago so do average home prices. This is interesting though because with higher unemployment rates traditionally comes lower incomes and hesitation around the housing market. However, during the COVID-19 pandemic, as shown, the average price for a home has been increasing despite higher unemployment rates. Demand for existing homes has been up substantially across the nation over the last year

COVID’S Economic Impacts Continue in Michigan and Beyond

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Twenty-twenty may be a wrap but the COVID-19 pandemic continues on and the economic impacts continue to be felt, nationally and locally. According to the Michigan Department of Health and Human Services, on Jan. 2, 2021 there were 497,127 confirmed COVID-19 cases; that is 8,983 new confirmed cases since Dec. 29, 2020 (the State did not release data over the New Year’s holiday). According to the five-day rolling average (shown in the chart below) there were 489,096 confirmed COVID cases in Michigan on Dec. 31, 2020. New case numbers continue to remain in the thousands, and while the vaccine is in its first phase of distribution, we still have a ways to go until the affects of this virus—physically, economically, socially and mentally—are no longer felt.

In November of 2020 the unemployment rates for the State of Michigan and for the City of Detroit increased after general declines between July and October. The State of Michigan reported an unemployment rate of 6.3 in November, a higher rate than what was reported in October, which was 5.7—the lowest rate reported since the pandemic began. While the November unemployment rate was still lower than what was reported between April and September of 2020, it was still an increase from October and likely a reflection of the stronger COVID-19 restrictions imposed by the State and growing caution from citizens as the confirmed case numbers began to rapidly increase.

For the City of Detroit, the unemployment rate for November of 2020 was 18.7, which is higher than the October rate of 15.4. While Detroit’s unemployment numbers remain much higher than what they were a year ago and above the State’s, the city is following the same trend as the State. Furthermore, the November unemployment data shows how the unemployment gap between the State and Detroit continues to grow wider as the case numbers increase.

A direct reflection of the unemployment data above is the number of small business closures. According to the Southeastern Michigan Council of Governments (SEMCOG), 33 percent of small businesses in Metro-Detroit closed as of Dec. 30, 2020. While this lower than the May 12, 2020 local small business closure percentage of 54 it is still far above the 3 percent closure rate on April 1, 2020—less than a month after COVID hit Michigan.

The data on the percentage of small business closures is determined through the Opportunity Insights Economic Tracker. This source uses credit card transaction data from 500,000 small businesses and estimates closures from the number of small businesses not having at least one transaction in the previous three days. The data covers industries such as healthcare services, leisure and hospitality, and retail and transportation.

Michigan’s economy continues to rely heavily on the auto industry and between February and March of 2020 auto sales for cars, trucks and light weight vehicles were cut in half. Since then, the number of auto sales has slowly, yet steadily, grown—but not to pre-pandemic levels. In November of 2020 auto sales for: light weight vehicles was 15.5 million, compared to 16.9 million the year prior; light truck sales was 11.8 million compared to 12.6 million in November of 2019; car sales was 3.8 million, compared to 4.4 million the year prior. All three types of vehicles have experienced a decline, with light weight vehicles experiencing the largest decline when comparing 2019 sales to present sales.

Below shows the consumption expenditures of goods in the U.S. between 2019 and 2020. According to the U.S. Bureau of Economic Analysis, durable goods have an average useful life of at least 3 years (e.g. motor vehicles) while nondurable goods have an average useful life of less than 3 years (e.g. food) and services are commodities that cannot be stored or inventoried and are consumed at the time of purchase (e.g., dining out). The chart below shows how in March of 2020 consumption of nondurable goods increased while consumption of durable goods and services decreased. Following the initial panic of the COVID-19 pandemic, consumption expenditures of nondurable goods decreased in April, 2020 and have since somewhat leveled off. In November of 2020 $3167 billion in nondurable goods was consumed and in November, 2019 $3017 billion in nondurable goods was consumed.  Overall, there has been an increase in consumption expenditures of nondurable goods since last year. For durable goods, $1813 billion was consumed in November of 2020 and in November of 2019 $2032 billion was consumed; this shows an overall decrease.

Services have been the hardest hit in terms of expenditure consumption. In November of 2020 $8014 billion in services was consumed and in November of 2019 $8589 billion was consumed.

In addition to COVID impacts on employment rates and consumption of goods and services, it has also impacted the sale prices of homes. However, the pandemic seems to have had the opposite effect—home prices have continued to increase.

According to the Case-Shiller Home Price Index, the average price of single-family dwellings sold in Metro Detroit was $135,760 in September of 2020; this was $164 higher than the average family dwelling price in August. The September 2020 price was an increase of $8,290 from September of 2019.

Economic Indicators: Industrial Areas Seeing Increase in Leasing

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In October of 2019 the unemployment rate for the State of Michigan was 3.5, the same as it was for the month of September, according to the most recent data provided by the Michigan Department of  Technology, Management and Budget. The State unemployment rate for October of 2018 was only slightly higher than it was this year in October, 3.7.

In October of 2019 Detroit’s unemployment rate was 7.8 percent.  That Detroit unemployment rate was 0.7 points lower in October of 2019 from the previous month. Also, the October 2019 unemployment rate for Detroit was 1.5 points lower from the previous year. In October of 2018 it was 9.3 percent.

The chart above displays the unemployment rates for each of the seven counties in Southeastern Michigan for October of 2018 and 2019. In October of 2019 Wayne County had the highest unemployment rate at 4.5. Washtenaw County had the lowest unemployment rate at 2.5.

Between October of 2018 and 2019 each county in the region had a lower unemployment rate in 2019 than the previous year; the county with the largest decrease was Macomb County. In October of 2018 the unemployment rate in Macomb County was 4.1 and in October of 2019 it decreased to 3. Also, Macomb, Livingston, Monroe and Washtenaw counties all had unemployment rates at 3 percent or lower while St. Clair and Wayne counties had unemployment rates at 4.1 and 4.5, respectively.

The availability of industrial spaces is another aspect of an area’s financial health and below is information from the quarterly reports of Cushman and Wakefield, a global real estate firm, which produces information related to Metro-Detroit. According to the company, leasing of industrial spaces in the third quarter of 2019 is up from the second quarter, with the Airport area having the strongest increase by landing companies such as DSV and Crane World Wide Logistics with their lease renewals. Additionally, the overall vacancy rate in the Metro-Detroit area is at 2.9 percent, and as shown in the first chart below the Downriver and East side areas have the lowest vacancy rates at 1.5 percent. The Southfield area has the highest vacancy rate at 5 percent.

The second chart below shows the average cost of industrial spaces in the region per square foot. There are three different types of industrial space as defined by Cushman and Wakefield and those are: manufacturing, office space and warehouse/distribution spaces. As the chart shows, office space has the highest market value, with the Southfield area having the highest cost at $14.19 per square feet. In nearly all the areas warehouse/distribution spaces has the second highest cost with Southfield again having the highest market rate at $7.15 per square foot. In the Downriver and Troy areas though manufacturing spaces have a higher market rate than the warehouse space. In Downriver, manufacturing spaces average $4.94 per square foot and warehouse spaces average $4.80 per square foot; in Troy manufacturing spaces average $7.22 per square foot and $5.60 per square foot for warehouse spaces. Troy also has the highest market value for manufacturing spaces in the region.

According to Cushman and Wakefield, there is an expectation that utilization of industrial spaces will continue to increase in 2020 meaning a continuation of low vacancy rates.

The above chart shows the Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area. The index includes the price for homes that have sold but does not include the price of new home construction, condos, or homes that have been remodeled.

According to the index, the average price of single-family dwellings sold in Metro Detroit was $129,250 in September 2019; this was $800 lower than the average family dwelling price in August. The September 2019 price was an increase of $4,460 from September of 2018 and an increase of $11,650 from September of 2017, an increase of $19,470 from September of 2016 and increase of  $25,670 from September of 2015 and, finally, an increase of 
$30,910 from September of 2014.