Economists: Michigan Stands to Lose 108,000 Jobs in '09 Before '11 Recovery

CHICAGO - Michigan could lose up to 108,000 jobs next year, pushing its unemployment rate over 10% through 2010 before seeing some recovery in 2011, University of Michigan economists said Friday at their annual economic forecasting conference.

Already suffering from a weak housing market, the state will face challenges stemming from a national recession and continued woes afflicting the U.S. automobile industry. Even assuming that the Big Three win substantial government assistance in the near term, the industry is still likely to employ less than a third of the workers in 2010 than it did in 2000, economists predicted.

"The hard times in Michigan are here to stay for awhile longer," economist George Fulton said Friday at the 56th annual University of Michigan Research Seminar in Quantitative Economics. The double-digit unemployment rate next year is expected to be the highest since 1984.

Fulton and colleague Joan Crary estimated that Michigan lost 81,000 jobs this year, and would shed an additional 108,000 jobs in 2009 before job loss slows to 24,000 in 2010. By 2011 the state could begin to see an increase in jobs.

"It will be a rough year, especially the first half, but if there is a silver lining to our forecast, it is that we see the situation improving over the year," Fulton said in a statement. "We expect that 2010, though not an especially good year, will nevertheless be much better."

The economists' forecasts will figure into state budget decisions heading into 2009 and 2010. Gov. Jennifer Granholm warned a few weeks ago that the state could face a $600 million deficit and that she would implement a series of budget cuts after the economists released their annual forecasts. Like the economists, Granholm said a federal stimulus package would help the state's economy and could lessen future budget cuts.

After hearing the economists' figures, Michigan Senate Fiscal Agency director Gary Olson told the Associated Press that, based on the predictions, the state would be forced to revise downward its revenue estimates for 2009 and 2010. Officials have already lowered their revenue expectations for fiscal 2008 twice this year. Olson said lawmakers would have to either make cuts or raise taxes to avoid a "massive hole" in fiscal 2010.

The 2009 job losses are expected to include 18,000 in the construction industry, 53,000 in manufacturing, and 18,000 in professional and business services. The education and health services sector is expected to gain about 22,000 positions, economists said.

Also at the conference Friday, Fulton suggested that the consequences could be severe if Congress does not approve a bailout for the Big Three automakers. But he added the companies should agree to a set of conditions to receive the money.

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