Monday, February 23, 2015

Detroit City in 2015

Michigan's economy is definitely on the upswing and the new year promises more of the same with the state's unemployment rate on a downward trajectory, auto sales on a tear and the happy surprise of below-$2-a-gallon gasoline putting extra cash in pockets and priming sales of highly profitable SUVs and light trucks.

 To be sure, there are always unexpected obstacles to good economic growth, but the stars and dollar signs seem to be lining up for an upbeat 2015. State officials, analysts and corporate leaders interviewed by the Free Press point to positive growth and job creation for 2015. University of Michigan economists in their annual forecast predict nearly 60,000 new jobs for 2015 and another 73,000 in 2016.

The state added 39,000 new jobs from November 2013 to November 2014, and the state unemployment rate has fallen from 7.8% to 6.7% as of November 2014. J. Patrick Doyle, CEO of Ann Arbor Township-based Dominos Pizza, one of the nation's best performing stocks of the last several years, said pizza sales increase when more people have jobs. He said the state and nation should keep improving. "We're going to continue to grow.

Overall a lot of the foundational pieces are in place in the state," he said. "So I'm generally very optimistic about the state and about the country." Here are five key trends analysts and experts expect for the Michigan economy in 2015

 ■ Gas prices will power additional spending and jobs. With gas prices below $2 a gallon at some stations, consumer confidence is high, and that's great news for businesses. The Detroit Three automakers, whose product portfolios are still weighted more heavily toward highly profitable bigger vehicles, are expected to benefit as shoppers rush to the showroom. DETROIT FREE PRESS Gas prices nearing low, but big rise not expected Low oil prices aren't good for the smattering of oil drillers and natural gas companies in Michigan, but that sector of the state's economy is far smaller than in the major energy producing states in the U.S. "My gut tells me it's a positive for Michigan because it's leaving more disposable income in the hands of our citizenry," said Michael Finney, chief economic adviser to Gov. Rick Snyder.

 ■ Tourism will fuel job growth. Michigan's hospitality sector is surging. Hotels, resorts and tourist destinations, particularly in the northern part of the state, are flourishing. The leisure and hospitality sector is expected to add about 9,000 jobs in 2015, according to the U-M forecast.

 ■ Manufacturers won't add many jobs. The auto industry can handle most of the demand for new cars with the plants that it already has. Don't expect new assembly plants in Michigan or many new shifts. With U.S. auto sales potentially reaching the 17 million mark in 2015, auto factory employment may not get much higher in Michigan. The manufacturing sector is expected to add only about 6,000 jobs in 2015. By comparison, it added 77,000 manufacturing jobs from 2011-13.

 ■ Investors will seek out downtown Detroit. Economic development officials report renewed interest from prospective investors in downtown Detroit following the consensual resolution of the city's Chapter 9 bankruptcy. With a plan in place to overhaul city services and drastically reduce blight, Detroit has greater appeal to investors. But most of the investment will concentrate in the central business district, not reaching into the city's poor neighborhoods.

 ■ The temporary staffing sector will continue to grow. Taken together, temporary jobs and contract positions represented an estimated 36% of Michigan's job growth since 2009, according to federal figures. Employers are leaning heavily on temporary jobs to create flexible workforces, making it easier for them to shed jobs as the economy shifts. Watch for companies to add more temp jobs in 2015. Contact Nathan Bomey: 313-223-4743 or Follow him on Twitter @NathanBomey. Staff writer John Gallagher contributed.

Detroit Is an Example of Everything That Is Wrong with Our Nation

On July 18, 2013 the city of Detroit filed for Chapter 9 bankruptcy. Detroit is now seeing a little life, but the city is far from where it once was. Once the wealthiest city in America, known as the “arsenal of democracy,” Detroit was the fourth largest city in the U.S. in the 1960s with a population of two million. Now it has become an example of everything that is wrong with the American economy, Detroit has become nothing more than a devastated landscape of urban decay with a current population of 714,000 whose unemployment rate at the height of the recession was as high as 29 percent, and has only decreased due to the rapidly decreasing population.
Visiting Detroit is the closest Americans can come to viewing what appears to be a war-torn city without leaving the U.S. This former powerhouse is a barren stretch of land, devastated by looters and and full of run-down, vacant houses. Rows upon rows of dilapidated structures line the streets; empty apartment buildings and factories consume the landscape. Almost a third of Detroit has been abandoned.
Unfortunately, Detroit is not alone. All across America, cities are being devastated by their own collapsed manufacturing bases. The U.S. government abandoned its manufacturing prowess when it pursued “free trade” deals that make it impossible for America to compete. The North American Free Trade Agreement all but eliminated manufacturing in the U.S,. as American auto companies were forced to relocate their manufacturing south of the border in search of lower costs. Without moving to Mexico, the American automobile industry could not compete globally with the rest of the world’s lowered labor costs and lax environmental standards.
Now the city is debt-ridden and forced to cut many of its beleaguered services like transportation and street lighting. As public services are shuttered, the poor continue to suffer. Gazing at the streets of Detroit today, where the average house price is only $7,500 (some houses sell for as little as a few hundred dollars), it is hard to imagine the Motor City’s glory days.
During the 1960s and ’70s,  Japanese cars began entering American markets. Japan came equipped with a plan: put American auto companies out of business. Congress seemed to welcome this new foreign competition with open arms. Many of these same government policies pushed American auto giants like Ford, GM and Chrysler (now owned by Italian Fiat)  out of the country.
NAFTA put the final nail in the coffin, making it too expensive for American auto companies to manufacture cars in the United States. Knowing they could no longer produce competitively, American automakers shipped their jobs to Canada and Mexico.
Decades ago, no one would have ever dreamed that Detroit would one day become the epicenter of American decline. The birthplace of the American car industry, with the highest median income and the highest rate of home ownership in the 1950s, now appears to be a city devastated by destruction. Unfortunately Detroit’s decay may only be the beginning: as the United States continues to take on debt let manufacturing fall by the wayside with an increasing push for more “free trade,” Detroit may not be the only “war-torn” city in the U.S. for long.
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