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
Abdul El-Sayed is leading in the polls ahead of Michigan’s Aug. 4 Senate primary. If he wins the nomination, Democrats will learn fast whether his politics can win a battleground state.
Senate hopeful Haley Stevens booed during Democratic convention
Representative Haley Stevens was met with boos while giving a speech at the Michigan Democratic Endorsement Convention in Detroit on Sunday, April 19.
In 2025, Elissa Slotkin, a Democratic U.S. senator from Michigan, observed the following about her political party: “We’re like a solar system with no sun. We don’t act as a team, and when we don’t work as a team, we turn our guns on each other, and it’s so, so, so, fruitless.”
Fast-forward to now, and the Democratic Party seems to be moving in a distinct direction: far left. Like, socialist left.
From New York to Colorado, newcomer democratic socialists have unseated sitting members of Congress.
But these victories, so far, have come in solidly leftist strongholds. What I’m watching closely is whether a far-left progressive can win in my state of Michigan, a battleground state that helped elect President Donald Trump in both 2016 and 2024.
The Democratic Senate primary here is Aug. 4, and it’s caught the attention of the country because control of the Senate could be decided in the Great Lakes State. Democratic Sen. Gary Peters isn’t running for reelection, giving Republicans a chance to win the seat back.
Democrats must flip four seats to take control of the chamber, and holding Michigan is essential to that math.
To the chagrin of more “moderate” Democrats, candidate Abdul El-Sayed – a former public health official who’s the darling of democratic socialists like Vermont Sen. Bernie Sanders – has done remarkably well in the polls, and he’s maintained a lead over more traditional opponents U.S. Rep. Haley Stevens and state Sen. Mallory McMorrow.
McMorrow suspended her campaign on July 5, first reported by The Detroit News, after weak polling numbers and likely pressure from Democratic Party insiders.
If El-Sayed pulls off a primary win, it could signal which sun the Democratic Party is heading toward.
What works in the primary may not play as well in the general
But El-Sayed may face bigger challenges if he makes it to the November election.
He’ll face off against Republican Mike Rogers, a former congressman who narrowly lost his 2024 Senate bid to Slotkin.
Michigan hasn’t elected a Republican to the Senate in more than 30 years. Yet while Slotkin is a Democrat through and through, she’s adept at appealing to independents and moderates.
That’s not true of El-Sayed, who has palled around with self-identified Marxist streamer Hasan Piker on the campaign trail, in addition to Sanders.
“El-Sayed joins the list of radical leftists running nationally that will also cause consternation amongst mainstream Democrats,” former Michigan Republican Party Chairman Saul Anuzis told me. “Slotkin has already raised the alarm bells and that probably indicates she’s hearing from her constituency, and El-Sayed will need them as well.”
Michigan could determine whether Republicans hold their Senate majority – and it’s the GOP’s best shot at flipping a seat outright.
El-Sayed may be able to rally more radical progressives and the anti-Israel base in the primary, but that message will be a tougher sell to Michigan voters as a whole. As Anuzis put it, El-Sayed’s strength in the primary is his weakness in the general.
“If he wins, then more mainstream Democrats, Reagan/Trump Democrats and culturally conservative, working-class independents will have to make a choice,” he said. “I think that greatly helps Rogers.”
Democratic leadership is shying away from El-Sayed. Will it matter?
Senate Democratic leader Chuck Schumer has openly backed Stevens, the sitting congresswoman, in the race. He and other Democrats clearly think she’s best suited to take on Rogers in November. Along those lines, ahead of McMorrow dropping out of the race, retiring Sen. Peters told associates that Democrats need to back one of the more mainstream candidates to oppose El-Sayed, according to The Wall Street Journal.
Still, El-Sayed has landed a coveted Michigan endorsement: that of the powerful United Auto Workers union, which praised the candidate for pushing forward “a strong working-class agenda with moral clarity.”
And while some believe that McMorrow exiting the race will boost Stevens, that’s far from a certainty. McMorrow notably did not throw her support behind one of the other contenders and her name will remain on the primary ballot.
Following Zohran Mamdani’s successful bid in 2025 for mayor of New York City, U.S. House Minority Leader Hakeem Jeffries said he didn’t think the democratic socialist represented the future of the Democratic Party.
With several more socialists recently winning seats in Congress, that looks a lot less certain.
Whether El-Sayed prevails in the primary, and then wins over Michigan voters in November, will be the biggest test yet of how far left Democrats are willing to go.
Ingrid Jacques is a columnist at USA TODAY. Contact her at ijacques@usatoday.com or on X, formerly Twitter: @Ingrid_Jacques
Detroit Economic Club: Kevin Guskiewicz Ph.D., J. Batt and Matt Elliott
Detroit Economic Club meeting with MSU President Kevin Guskiewicz Ph.D., Athletic Director J. Batt, and moderator Matt Elliott.
Weeks of waiting have paid off for Michigan State, to the tune of $2.5 million.
The reversal of President Kevin Guskiewicz’s decision to leave for Clemson means Kentucky will owe the full $5 million contract buyout for poaching athletic director J Batt last month. A clause in Batt’s contract had cut that buyout in half if Guskiewicz left before him, but Guskiewicz’s decision to stay after all leaves Kentucky with the full buyout.
Guskiewicz, 60, had accepted the presidency of Clemson University in South Carolina after two years on the job at Michigan State. Three weeks later, athletic director J Batt also took a new job at Kentucky, which will pay him nearly $3 million per year on a six-year term sheet signed June 17.
As of Monday, Michigan State’s athletic director position is still occupied by Batt, 44, whose departure date for Kentucky is still to be determined. It is still expected that Batt will depart for Kentucky, and with that Michigan State will still need to hire a new athletic director.
Monday afternoon, Kentucky President Eli Capilouto confirmed Batt will still leave Michigan State for Kentucky, posting a statement on X that, “J Batt and I spoke this afternoon and he has reinforced his commitment to UK and his excitement about joining the Big Blue Nation as soon as possible. We are working quickly to finalize his start date and his family is eager to join our community as well.”
However, Michigan State will embark on its athletic director search with a $5 million sum from Kentucky aiding its search.
Buyout sum opens up Michigan State’s options for AD hire
Michigan State made an aggressive move when it hired J Batt away from Georgia Tech. It signed him to a six-year, $12.6 million contract in June 2025 that ranked Batt in the top 10 nationally in base salary. Michigan State also paid his $2 million buyout at previous school Georgia Tech on top of that contract. Now, a little over a year later, Michigan State must repeat that process all over again.
Contractually, athletic directors are on the hook for liquidated buyouts, assessed as damages for ending a contract early. In practice, however, this is almost exclusively paid for by the hiring institution. Usually buyouts are scaled by contract length, with more expensive sums in the early years of a contract and cheaper costs to depart later on.
A $5 million buyout is on the high end of the spectrum, reflective of Batt’s departure early in the second contract year of his tenure.
If Michigan State wanted to poach Michigan’s Warde Manuel, for example, the cost would be twice his base salary, which amounts to $3.8 million. The latest contract for Western Michigan athletic director Dan Bartholomae lists a liquidated buyout of $5.1 million until 2027.
Gaining $5 million for Batt’s departure gives Michigan State with a strong sum to hire Batt’s replacement. If the school uses the whole sum toward a new candidate, it could have its pick of the litter, so to speak.
It could also choose to bank that money and hire someone outside of another university. It could look internally, particularly at executive deputy athletics director Jon Palumbo, who is the CEO of new fundraising arm Spartan Ventures. Or it could tap someone outside of the NCAA realm, such as former athletic director Mark Hollis, who has thrown his name in the ring. He resigned in 2018 after spending a decade as athletic director.
cearegood@detroitnews.com
@ConnorEaregood
Michigan drivers are getting some much welcomed relief at the gas pump as the cost for regular unleaded has fallen below $4 for the first time since April.
Michigan gas prices went down 14 cents since last week, with a gallon of unleaded fuel costing an average of $3.96. The price is about 25 cents less than drivers were paying last month, but still around 80 cents more than Michiganders paid this time last year, according to AAA.
For a 15-gallon tank of gas, that equates to an average of $59 to fill up — an increase of about $8 from 2025’s highest price reported in August.
In Metro Detroit, average daily gas prices decreased to $4.01 — or about 13 cents less than last week’s average but still 81 cents more than the same time last year.
The most expensive averages reported by AAA were in Ann Arbor ($4.05), Metro Detroit ($4.01), and Lansing ($3.97), with the least expensive averages reported in Marquette ($3.62), Traverse City ($3.90), and Flint ($3.91).
Domestic gasoline supply decreased from 216.3 million barrels to 214 million, according to new data from the Energy Information Administration (EIA), while gasoline demand increased from 8.73 million barrels per day to 9.21 million. Gasoline production increased last week, averaging 10 million barrels per day.
Daily national, state, and metro gas price averages can be found at Gasprices.aaa.com.
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