Friday, December 28, 2007

Michigan's Top Economic Stories of 2007

Layoffs, closings and downsizing

From autoworkers to chemists, Michigan lost jobs steadily throughout 2007. A University of Michigan economic study tallied 76,300 jobs lost in 2007 and projected a loss of 51,200 for 2008. Ann Arbor's Pfizer began releasing employees in the summer at a rate of about 175 per month. All automakers reduced payrolls this year, even after forging agreements with the UAW that included job security measures. Plucking a familiar fear-based chord, Gov. Jennifer Granholm sent 35,000 layoff notices to state employees on the brink of a government shutdown that lasted only four hours the first day of October. The layoffs never came, but the gesture packed a symbolic punch.

Private equity firm buys Chrysler

The private equity firm Cerberus took control of Chrysler in August after Daimler shed the ailing domestic division. Named for the three-headed canine guardian of the gates of hell, Cerberus has a strategy of taking over companies in dire straits and reviving them through aggressive cost cutting. This fall marked the company's first venture in union negotiations with the UAW. Unlike GM and Ford, the new Chrysler made no promises of job security. Like GM and Ford, Chrysler announced job cuts before the ink was dry on the UAW agreement.

Foreclosure tsunami

While the "foreclosure crisis" is a national problem with international repercussions, Michigan has been among the top 10 states for foreclosures every month. According to RealtyTrac, from July 1 to Sept. 30 Detroit ranked second-highest among the nation's largest 100 metropolitan areas in the rate of foreclosure filings, with one for every 33 households. Policy makers at all levels of government are scrambling to propose solutions before another wave of adjustable mortgages resets its interest rates early in 2008.

Nation's highest unemployment all year

Michigan led the nation in unemployment all year with the exception of February and April, when Mississippi inched past Michigan by less than half a percent. Here are the Michigan numbers for the year from the U.S. Bureau of Labor Statistics: January 6.9 percent, February 6.6 percent (Mississippi 6.7 percent), March 6.5 percent (Mississippi 6.9 percent), April 7.1 percent, May 6.9 percent, June 7.2 percent, July 7.2 percent, August 7.4 percent, Sept. 7.5 percent, Oct. 7.7 percent, Nov. 7.4 percent. The national rate ranged from 4.4 to 4.7 percent in 2007.

Budget standoff stalls Legislature

Michigan's Constitution requires the Legislature to pass a balanced budget. This year that proved nearly impossible. In the 11th hour, after a four-hour government shutdown, the Legislature managed to pass a continuation budget. The gridlock lasted nearly nine months and threatened the state's credit rating. Without more structural changes, next year's budget process will likely be a replay of this year's saga.

Detroit development looking up

The Detroit Institute of Arts renovation and the new MGM Grand Casino and Hotel caught the eye of the New York Times, landing the city a spot on the "Places to Visit in 2008" list. The MGM Grand was also named one of the top 10 new U.S. hotels in 2007. In December, Standard & Poor's upgraded Detroit's fiscal outlook from negative to stable, making an upgrade of the city's credit rating conceivable. The city also attracted Quicken Loans, which plans to move its headquarters and over 4,000 jobs from Livonia to a new downtown location.

Michigan tourism promotion wins awards

Travel Michigan's Pure Michigan campaign featuring Tim Allen won kudos from the Travel Industry Association of America. The new Travel Michigan website ( gained recognition this summer as the #1 State Tourism Web Site, according to Hitwise United States (, an international company that tracks website traffic. This is good news, since according to George Zimmermann, vice president of Travel Michigan, "Visitors spend about $17.5 billion annually, which employs 193,000 people statewide and contributes $971 million in state taxes."