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 votes are in: 2024 election results from key races
2024 Michigan general election results from key races are in, which includes 13 district races.
The Detroit chapter of the NAACP released a statement calling the Michigan House of Representatives to be reconvened before the end of this year’s legislative session on Dec. 31. On Thursday after a tumultuous week of walkouts and absences, House Democrats adjourned with no plans for further voting.
House Republicans and state Rep. Karen Whitsett, D-Detroit, failed to attend sessions this week, walking out in protest.
The Republicans walked out together, hoping House Democrats would put up for a vote bills meant to preserve the tipped minimum wage in Michigan for servers and bartenders. Whitsett skipped Wednesday and Thursday for different reasons, telling reporters earlier this week that she left because she felt legislation on the table had been rushed.
Reverend Wendell Anthony, president of the Detroit NAACP, chastised those who missed the legislative sessions and demanded the House reconvene.
“Staying at home when you should be at work, hanging out in the halls or in a secure office when you should be doing the work for the people is shameful politics,” his statement reads.
In their plea for the legislature to return to Lansing, the NAACP floated the use of Joint Rule 15, a facet of the Joint Rules of the Michigan Senate and House that grants the Senate majority leader and the House speaker power, acting together, to convene either chamber of the legislature at any time in case of an emergency.
“In a final plea before the year ends, we respectfully call upon Speaker of the House Joe Tate and Senate Majority Leader Winnie Brinks to exercise their power and call the House back to session per Joint Rule 15,” the statement says.
“Power means nothing if you don’t exercise it,” Anthony said in the statement. “Leaving bills stacked on the table when they should be voted on, passed, and signed into law is your job undone.”
Breaking news reporter Liam Rappleye can be reached at LRappleye@freepress.com
JACKSON COUNTY, MI – Cafe Fuel is now welcoming customers to enjoy coffee and company in downtown Jackson.
In October, Fortress Cafe closed its location inside Lean Rocket Lab, leading the nonprofit to open a coffee shop of its own called Cafe Fuel. The new business opened its doors Monday, Dec. 9.
Fortress Cafe is closing downtown store, but new coffee shop will take its place
“Everybody’s super excited to be back and loving all the new options they can pick from,” Director of Member Services Sierra Sibson said.
People can find a variety of sandwiches, bagels, soups, salads, English muffins and coffee drinks. Popular are the steamed bagel sandwiches, which are usually made with bacon and eggs, or turkey and cheese, Cafe General Manager Faith Seneff said.
“It’s kind of a new thing that people haven’t heard a lot about, but you make your sandwich, put it in a steamer that we have, and it softens it,” Seneff said. “It kind of melts all the flavors together.”
Soups are hits with patrons so far, Seneff said. Options rotate between chicken noodle, broccoli cheddar, loaded baked potato and a tomato basil bisque.
Baked goods come from Jackson’s Doughnation Bakery and The ABC Bakery in Summit Township. Additionally, there is a space where the nonprofit can showcase those participating in the LOCAL Fellows Program, Sibson said.
Fortress Cafe is closing downtown store, but new coffee shop will take its place
“We’re just trying to utilize local businesses and bring more people in the space,” Seneff said.
Cafe Fuel still brews coffee from Fortress Cafe, which operates a farm and other locations, and Cafe Fuel makes a variety of lattes, cappuccinos, cold brew and hot chocolate.
Coffee fans can join a mug club for $29.99 a month. They will receive a Cafe Fuel mug and can fill it with free drip coffee or get $1 off specialty beverages, Sibson said.
Aside from the food, Lean Rocket Lab reconfigured the seating of the cafe to offer more comfortable options, including, high-top chairs, tables and couches. So far, both Sibson and Seneff have enjoyed seeing the seats full.
“We had a lot of people that are regulars that come in here and they like to work up here, have meetings with each other,” Sibson said. “I think they’re excited to be back.”
Cafe Fuel, 133 W. Michigan Ave., is open 7:30 a.m. to 4:30 p.m. Monday through Friday and 8 a.m. to 2 p.m. Saturday.
More information can be found on its Facebook page and website.
Want more Jackson-area news? Bookmark the local Jackson news page or sign up for the free “3@3 Jackson” daily newsletter.
The Michigan Department of Natural Resources (DNR) urges outdoor enthusiasts to stay safe as fluctuating winter conditions continue across Michigan.
According to a press release issued Friday (Dec. 20), proper preparation and caution are key to avoiding accidents while enjoying activities like snowmobiling, ice fishing, and hiking.
Winter Safety Tips
The DNR recommends dressing in light, adjustable layers to avoid overheating or freezing. Check weather and road conditions, and carry essential equipment like ice picks, ropes, flashlights, and backup gear.
“The right gear is definitely essential to going out,” said DNR conservation officer Brandon Vacek. “I mean, you want to make sure you’re dressed in layers to that you know you can adjust accordingly.”
Further, Vacek said people should travel with a buddy, inform someone of your plans, and ensure your communication devices work in remote areas.
“That goes back to always having, you know, a plan, leaving some information with someone about where you’re going and when you’re set to return,” said Vacek.
Staying hydrated and fueled with snacks is also important, according to the news release, and if you’re feeling unwell, it’s best to stay home.
Ice and Snowmobile Precautions
Ice conditions are unpredictable, so wear a flotation device and keep ice picks accessible, advised Vacek. Furthermore, snowmobilers should ride on the right-hand side of trails, keep speeds safe, and avoid alcohol.
Riders aged 12 to 16 must obtain a Michigan-approved snowmobile safety certificate to operate without a guardian or crossroads.
Last winter, the DNR reported that there were 19 snowmobile fatalities, highlighting the importance of caution.
For more safety tips and trail updates, visit Michigan.gov/RideRight and Michigan.gov/DNR/Education/Safety-Info.
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