One Michigan economist is predicting the state will see unemployment reach 22% this year.
Last week, the state revenue estimating conference predicted Michigan could see a budget shortfall of over $6-billion over the next two fiscal years.
Michael McWilliams is with the Research Center of Quantitative Economics at the University of Michigan, which presented at the estimating conference. He said their forecast projects the state will be down $8.5-billion by 2022.
“About a third of that will be from a reduction of sales tax, another half from reductions in income tax collections, maybe ten percent from businesses and everything else filling out the rest.”
McWilliams said their modeling counts on some assistance coming from the federal government and also assumes there won’t be a second coronavirus wave.
But McWilliams said economic recovery for the outbreak is likely to be faster than during the Great Recession.
“A lot of that is because the Great Recession was caused by imbalances in actual economics. Going back to January/February of this year the economy was looking great. If not for the pandemic I think we would still be looking great.”
McWilliams said the Research Center is projecting a recovery of 6 of the 10 lost jobs by year’s end.
And, by the end of 2022 they project 9 out of 10 lost jobs will be recovered.
McWilliams said while that’s not as fast as many people want, it is relatively quick.
During the Great Recession, unemployment peaked at about 14% - but took nearly a decade to recover.
Although, according to McWilliams, state economists are reluctant to call the state “recovered” from the Great Recession because job numbers began declining in 2000.
Those 2000 numbers are what the state hopes to get back to.