Michigan’s recovery outpaces rest of U.S.

Jaclyn Trop|The Detroit News

Michigan fell the hardest during the recession, but it’s bouncing back better than the rest of the country.

While economic uncertainty in Europe is creating a cloud over the U.S. economy, and the state’s unemployment rate has ticked up two-tenths of a percentage point to 8.6 percent in the past two months, existing home sales and retail sales in Michigan are doing better than elsewhere in the country.

“We’ve been telling our clients since late 2011 that Michigan is turning the corner faster economically than any other state in the country,” said Patrick Anderson, founder and CEO of the East Lansing-based consulting firm Anderson Economic Group.

Home sales are up 10 percent through June in the Great Lakes State compared with the nation’s 5 percent growth rate, according to the National Association of Realtors. And the state’s retail sales surged in April and May, while the national figure fell 0.2 percent.

The ongoing recovery of Detroit’s three automakers has paved the way for the uptick, with a resurgence in jobs and profitability. Michiganians figure the state has weathered the worst and are feeling more secure in their jobs, said Grosse Pointe Woods real estate agent Michael LeVan.

From his vantage point, “most people feel significantly better about their jobs than they did five years ago.”

The new confidence can be seen in the upswing in home sales in the four-county Metro Detroit region. Sales increased 5.1 percent through the first half of the year and have risen 11 of the past 12 months, according to Realcomp II Ltd., a Farmington Hills multiple listing service. Home prices in the Detroit area jumped for 10 straight months through April, according to Standard & Poor’s Case-Shiller index.

Homeowners are more confident in their ability to sell their homes, LeVan said, and are “reasonably sure that they’d be able to sell theirs, and not pay two mortgages for 10 or 12 months.”

“We’re now getting multiple offers on houses on a regular basis” for the first time in a decade, LeVan said, echoing the experience of many real estate agents.

LeVan made the biggest sale of his 14-year career with the Grosse Pointe Woods firm of Adlhoch & Associates — $1.7 million — within the past six months, he said.

Michiganians also are shopping and spending. More than half of retailers reported that sales rose in May, the best sales month since January, according to an index by the Michigan Retailers Association and the Federal Reserve Bank of Chicago. Two-thirds of retailers expect sales to rise this summer over the same three months last year.

Consumers ‘resilient’

“Michigan consumers appeared more resilient as our state continued its comeback from longer and more severe economic problems than those in other states,” said Jim Hallan, the association’s president and CEO.

They’re also spending more on cosmetic surgery, according to Dr. Anthony Youn, a Troy-based plastic surgeon.

“Plastic surgery, like an expensive vacation or a new car, is a big-ticket luxury item,” Youn said.

His business has risen 10 percent annually since 2009, when patients who wanted two operations opted for one, and others asked for minor fixes such as $500 Botox injections to postpone an $8,000 face-lift.

“Now, people are spending more at one time,” Youn said. “Their 401(k)s are doing better, and they have more money in their pockets.”

Because the auto industry downturns are nothing new, Michiganians are more conservative with their money, Anderson said. A Rockefeller Foundation report found that Michigan had the seventh-lowest level of “economic insecurity” in the nation from 2008-10.

“Some states weathered the downturn better than others, and Michigan was among them,” said study author Jacob Hacker, who added that Michiganians remain less economically secure than they were a generation ago.

The study defined economic insecurity as the proportion of people whose “available household income” — income after paying for medical care and servicing financial debts — declined 25 percent or more.

Creating a buffer

“Michigan residents have done a better job of creating a buffer against financial loss than folks in other parts of the country,” said study research associate Stuart Craig.

Michigan’s success is occurring even as gathering economic storm clouds are prompting businesses and households to become cautious with their money.

The U.S. economy grew 1.5 percent as consumers cut spending, the Commerce Department said Friday. Political uncertainty is driving households across the nation with incomes above $75,000 to cut spending, according to an index of sentiment from the University of Michigan and Thomson Reuters.

Awaiting election

About two-thirds of the clients with David VanEgmond, a partner with PricewaterhouseCoopers LLP in Detroit, are sitting on cash.

“They are willing to make investments, but are hesitant and waiting until after the presidential election,” VanEgmond said.

But Metro Detroiters remain optimistic. A Wayne State University and Institute of Supply Management survey of southeast Michigan purchasing managers this month found that more than three-quarters of respondents expect the business environment to remain stable or improve.

Detroiter Andrew Koper is feeling better about the economy and spending more money because he’s receiving more requests from staffing agencies for his Web development services.

“I have reps from staffing agencies initiating contact with me about jobs they are trying to fill, which wasn’t happening a couple of years ago,” Koper said

SHARE THIS POST

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on pinterest
Pinterest