Michigan
UM report forecasts moderate economic growth in Michigan, nation in 2025-26
As the Federal Reserve continues to cut interest rates amid a cooling job market, the economy is poised for moderate growth in Michigan and nationally over the next two years, according to University of Michigan economists.
The national economy is projected to grow 2.3% in the fourth quarter of 2024 with the unemployment rate averaging 4.2%, while growth may ease slightly in the near future due to a slowing labor market, the UM economists said in a U.S. Economic Outlook for 2025–2026.
Meanwhile, Michigan’s economy has slowed since spring, with heightened uncertainty due to the recent elections, the economists wrote in a Michigan Economic Outlook for 2025–2026. Both reports were written by Jacob T. Burton, Gabriel M. Ehrlich, Kyle W. Henson, Daniil Manaenkov, Niaoniao You and Yinuo Zhang.
“The U.S. economy has gone through times of great uncertainty before and emerged intact,” the economists wrote. “We are projecting that both Michigan and the nation will follow that path over the next two years.”
Job growth in Michigan is expected to decline in the second half of the year, but grow moderately in 2025 and 2026.
“We believe the election results have amplified the uncertainty surrounding Michigan’s economic outlook,” the economists wrote. “We project a small dip in Michigan’s job count in the back half of 2024 to give way to moderate job gains in 2025 and 2026, but the outlook depends critically on uncertain policy decisions and the subsequent market responses.”
The economists expect job growth in the state to be strongest in health care, leisure and hospitality and government, while sectors including manufacturing and professional services are expected to remain stable.
“We are projecting the state economy to return to growth over the next two years as easier monetary policy and another round of tax cuts boost medium-term growth,” the economists wrote. “Michigan adds 19,000 payroll jobs next year and an additional 26,700 in 2026. The unemployment rate in Michigan is projected to fall from 4.6% in late 2024 to 4.3% by the end of 2026.”
The Detroit, Grand Rapids and Ann Arbor metro areas showed a downward trend in job growth, with Detroit and Grand Rapids seeing 0.1% growth during the past year. Ann Arbor saw relatively stronger job growth of 1.3% as of September, according to the report. Metro-level data for October was not available for the report, officials said.
The report attributes the underlying cause of the slowdown in Michigan’s job market as the Federal Reserve’s policy of monetary tightening to control inflation.
“Although the Fed has recently pivoted toward reducing short-term interest rates, we believe that real interest rates remain at a restrictive level and that the effects of the Fed’s past tight monetary policy continue to impact Michigan’s economy,” the economists wrote. “Indeed, in many ways, the national rebalancing in the labor market is precisely what the Fed hoped to engineer with its policy actions. Unfortunately for Michigan, our relatively rate-sensitive industry mix means that higher interest rates have taken a larger economic toll than nationally.”
The Michigan outlook points to stronger personal income growth, with per capita income increasing to $64,000 in 2024 and reaching around $68,500 by 2026, up 41% from 2019.
Inflation is expected to slow to 3.3% in 2024 and 2.2% in 2025 before increasing to 2.7% in 2026 due to new tariffs that the incoming Trump administration is expected to impose.
The U.S. and Michigan economic outlook reports follow the presidential election, which economists say will result in significant changes in U.S. economic policies. In the reports, the economists shared their thoughts on about the impacts of a second Trump administration.
The recent election of Donald Trump as well as the Republican majorities in the U.S. Senate and House will likely to result in a continuation of tax cuts Trump enacted during his first term, the economists said. Also expected is a sharp rise in tariffs on imports from China to take effect by 2026.
While rising tariffs on Chinese imports and tax cuts for corporations and individuals are expected in upcoming years, revenue increases from tariffs are unlikely to offset revenue losses generated by tax cuts, according to the report. This could result in slower revenue growth and a sharp increase in federal deficits.
“As the stimulative effects of the expected tax cuts dominate the drag from the anticipated new tariffs, we project quarterly GDP growth to accelerate modestly during 2026, reaching a 2.5 percent annualized pace by 2026 Q4,” the economists wrote.
The report notes that the Federal Reserve has started cutting interest rates after keeping them at a 23-year high of 5.25% to 5.5% for 14 months. The rate was reduced by 50 basis points in September and 25 basis points in November, bringing it to 4.5% to 4.75%.
Additional cuts will depend on economic data, with the economists expecting another 25 basis point cut in December.
Looking ahead at next year, the economists say they expect the Fed to make four more 25-basis-point cuts in 2025 and reach a range of 3.25–3.5% by the end of the year.
“In our view, the temporary uptick of inflation related to tariffs will not prompt the Fed to tighten policy in 2026,” economists wrote. “We believe that risk management concerns related to the potential negative growth effects of tariffs, which played a role in the 2019 rate cuts, will balance the upside risks from new tax cuts, prompting the Fed to stand pat.”
cwilliams@detroitnews.com
@CWilliams_DN
Michigan
Michigan basketball ‘hungry’ for a ranked win, gets two shots this week
ANN ARBOR — Earlier this season, Michigan played a handful of home games against non-power-conference teams and destroyed them all. The closest margin in those games was 31 points. During that time, Michigan’s freshmen starters, especially Syla Swords, were eager for bigger challenges. They bugged their coach about it.
“‘I want that next great team. I want another ranked team,’” Swords said, according to Kim Barnes Arico. “She’s relentless.”
The Wolverines will get a couple of chances this week. They visit No. 23 Minnesota on Wednesday (8 p.m. ET, 7 local, B1G+) and host No. 21 Michigan State on Saturday (noon, Big Ten Network).
Michigan (13-5 overall, 4-3 Big Ten) has won three straight, most recently Saturday’s 87-71 victory over Rutgers at Crisler Center. Michigan’s defense was locked in from the start. Rutgers guard Kiyomi McMiller entered as the Big Ten’s second-leading scorer at 20 points per game. She missed all eight of her shots against Michigan and didn’t score.
“We threw a lot of bodies at her and just made her feel uncomfortable,” Barnes Arico said after the game.
One of those defenders was Te’Yala Delfosse, an athletic 6-foot-3 forward who tallied 10 points and three steals in 19 minutes off the bench. Delfosse was sidelined with an injury for about two months, missing valuable preseason practice time and not debuting until Michigan’s sixth game on Nov. 24.
“She’s so long, she’s so disruptive,” Barnes Arico said. “She just gives us something different than everyone else.”
Three other Michigan freshmen have been consistently producing all season in the starting lineup. Swords had 20 points, six rebounds, and four assists against Rutgers. Mila Holloway had 13 points, seven assists and five boards, while Olivia Olson added 13 points and four rebounds.
Barnes Arico was impressed with Swords’ on-court postgame TV interview in which she downplayed her scoring. “I’m here to win games,” Swords said. “I’m not here to score.”
“I think that’s kind of the mentality of our freshmen, which is pretty incredible,” Barnes Arico said. “They’re so unselfish. … They make extra passes, they find each other, they play basketball the right way.”
The veterans are contributing too. Jordan Hobbs is capable of scoring 20 in any game (she did it last week). Greta Kampschroeder has embraced her role as the center in Michigan’s all-guard starting lineup and is shooting 42 percent from 3. Yulia Grabovskaia, a legitimate center at 6-foot-5, has played her best recently.
Michigan, currently ranked No. 24 in the AP Top 25 poll, is 13-0 this season against unranked teams (those teams have not been ranked in the AP Top 25 poll at all season). The five losses have come against top-10 teams (three of those teams are still in the top four; the other are two are still top 15).
“It’s our time to get a ranked win,” Olson said after the Rutgers game. “We’re hungry for it.”
Minnesota (17-2, 5-2) is 11-0 at home in Dawn Plitzuweit’s second season as head coach. The Gophers average the fewest turnovers per game in the country.
Michigan State is 15-3 (5-2) entering Wednesday night’s home game against Penn State. The Spartans have been strong defensively, forcing turnovers and blocking shots at a high rate.
Barnes Arico hopes Michigan’s previous games against top competition will help her young team. “I just think experience is the greatest teacher,” she said. “There is nothing like it. I could try to simulate it in practice all day long.”
Her players, especially the rookies, are eager for what awaits this week. Big games are why they came to Michigan.
After losses, Barnes Arico said they came to her with a message: “‘We learned this, learned this, studied this — we’re prepared for the next one.’ I don’t know if they always are, but they think they are.”
We’re about to find out.
- BETTING: Check out our guide to the best Michigan sportsbooks, where our team of sports betting experts has reviewed the experience, payout speed, parlay options and quality of odds for multiple sportsbooks.
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Michigan
Good Afternoon, Michigan Football: U-M attacking the offseason
M&BR’s Dennis Fithian is back with another episode of Good Afternoon, Michigan Football!
Former Wolverine Jim Scarcelli joins the show and goes over the Lions’ playoff loss, how UM is attacking the offseason, U-M hoops and the national title game tonight.
Breakdown
Open (Lions loss) 00:00-8:10
U-M offseason 8:11-20:25
Michigan players’ jersey numbers 15-30 20:26-32:51
U-M basketball 32:52-37:52
Cade McNamara 37:53-40:40:54
OSU/ND 40:55-49:09
—
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