LANSING – Economists at Friday’s revenue estimating conference were unyielding in assessing the problems facing the Michigan economy, but offered a glimmer of hope in suggesting the state is much closer to the end of the slump than to the beginning. They pegged the return to relatively good news by 2010.

But in the nearer term, Michigan will continue to suffer with slowing sales of cars and light trucks by the Detroit automakers, the collapse of housing values and surging oil prices that is driving an inflation rate to its highest levels in decades.

“We’re in an economic transition, but my feeling is we’re much closer to the end than the beginning,” Treasurer Robert Kleine said as the conference opened. His agency’s economic and revenue assessment followed similar, but somewhat more pessimistic, projections released earlier in the week by the Senate and House fiscal agencies.

SFA Director Gary Olson, who said he expects a solid economic picture to emerge by 2010, pleaded with the economists to come up with some positives mixed in the expected bad news they were expected to offer.

George Fulton and Joan Crary of the University of Michigan Research Seminar in Quantitative Economics, did indeed show continued problems with the restructuring of the automobile industry and the housing slump continuing through 2008, and unemployment, now at 7 percent, continuing to rise to an annual average high of 7.9 next calendar year. Even that would have been worse, Mr. Fulton said, were it not for the exodus of workers from the labor force.

But Fulton said, “By end of 2009, job growth nudges into positive territory, and will continue through 2010. Although the current economic strife makes it hard to see the light at end of the tunnel, there is a glimmer of hope in our forecast.”

Crary said in addition to the housing slump sapping consumer confidence (at its lowest point in 17 years) and the spending that engenders, the biggest risk to the economy turning around is the sudden increase in oil prices.

Fulton, who offered just two bits of hopeful information in the Michigan forecast, sees a better outlook for the school aid fund than the general fund. The school aid revenue of $11.75 billion is an increase of 3.2 percent, which he said will make school budgets whole and replace the sagging property tax revenues.

But the general fund continues to take a hit: down 2.1 percent to $9.05 billion in the upcoming fiscal year.

He does not see significant problems for the current fiscal year in either fund, with the general fund benefiting from the change in business taxes and the increase in the income tax rate.

Comerica economist Dana Johnson also zeroed in on the “incredible slide” in the housing market and the risk posed by spiking oil prices, but said key indicators such as the drop in nonfarm payroll jobs and earnings are not as bad as the last recession due in part to better trade helped by a weak dollar.

“I do see a challenging environment, but it is not as severe as in 2001,” he said. And with auto restructuring coming to an end a year from now, he said, “This enormously difficult drag that has affected Michigan for the last three-four years is about to end and we can look ahead to where the Michigan economy will again begin to grow.”

Johnson also said the old maxim of Michigan experiencing wilder swings in the economy are no longer true, and will more closely track the national experience as the economy turns around.

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