ANN ARBOR – Amid the carnage of Michigan’s shredded economy, economists at the University of Michigan found some glimmers of good news in their annual forecast issued Friday, saying the pace of job losses would slow substantially during 2010 and 2011.

But the bottom line for the next two years will be a continued overall loss of jobs for the state with the tide only turning at the end of 2011, according to the U-M Research Seminar in Quantitative Economics.

“Our forecast for Michigan through 2011 suggests that we have left the worst behind us, but still have some distance to travel before we see sustained job growth in the state,” said George Fulton, director of the U-M research seminar.

The presentations from Fulton and Arthur Schwartz, general director of labor relations at General Motors, were laced with gallows humor. After Schwartz finished his presentation, the moderator quipped that the audience could now take a break for some Zoloft, an anti-depressant.<.p>

And the numbers forecast were bleak, from unemployment, to personal income growth to state revenues.

The state’s unemployment rate will peak in 2010 at 15.8 percent – the highest annual rate in at least 40 years – and then improve at an excruciatingly slow pace, falling to 15.1 percent by the end of 2011, the forecast said. In October, the rate stood at 15.1 percent. The forecast indicates the state will not break the worst monthly unemployment rate on record of 16.9 percent seen in November 1982.

And the job growth at the end of 2011 won’t be enough to make 2011 a good year overall. Economists project total job losses of 16,000 for the year. On the bright side, that is a huge improvement from the 283,000 projected job losses in Michigan for 2009 – the worst calendar year in 70 years.

Fulton spent a solid portion of his presentation reviewing the seminar’s 2008 forecast for 2009 and how wildly overoptimistic it was. That’s fairly disturbing, considering that no one who attended the grim 2008 forecast could have thought it overly optimistic.

A year ago, the seminar forecast a 3 percent decline in salary and wage employment, a fall that would have been the fourth-largest annual decline in jobs in the nearly 40-year history of the university producing a state economic outlook. Instead, the figure will fall by 6.8 percent, which Fulton dubbed “astonishing.”

Fulton said the seminar underestimated the scope of job losses in the manufacturing, professional and business services sectors.

And when Fulton was asked when Michigan might become more in line with national employment trends, he said, “One of the ratings agencies said it would take 30 years, and I was pleased. I thought that was an optimistic forecast.”

Further, the seminar forecast only 0.7 percent growth in personal income for 2009 when in fact it will fall by 3.4 percent – the only year since 1970 when it fell.

Fulton described the progress to come as “painfully slow,” but said the fundamentals of the state’s economy are improving.

“The impetus for the small improvement comes from the national economic recovery and the better-positioned auto companies,” he said. “It’s going to take time.”

Perhaps the most staggering figure of all: Once job losses end in late 2011, the state will have shed a whopping 937,000 jobs between mid-2000 and 2011, about one in every five jobs that existed at the beginning of that period.

The forecast called for meager personal income growth of 1 percent in 2010 and 1.7 percent in 2011. Perhaps more tellingly, the seminar’s forecast of real disposable income growth – personal income adjusted for taxes and inflation – will be unchanged in 2010 and fall 2 percent in 2011. Fulton said 2011 would be the weakest year for Michigan purchasing power since 1981.

And with the woes of U-M’s football team on the eve of playing rival Ohio State University, Fulton lamented he couldn’t even make a prediction on that game.

“I usually give my forecast for the football game, but this team has become as erratic and unpredictable as the Michigan economy,” he said.

STATE REVENUES: The seminar’s projections are a key component state economists use to estimate revenues for budgeting purposes. And the seminar forecast bad numbers for the 2010 calendar year with stabilizing in 2011.

For 2010, revenues that go into the general fund were forecast to fall by 7.4 percent from 2009, when revenues fell by 20.8 percent. In the School Aid Fund, revenues will fall in 2010 by 4.4 percent after a 5.3 percent plunge in 2009.

But in 2011, general fund revenues will rise by 0.9 percent, putting them at just $6.93 billion. School Aid Fund revenues will fall by 0.4 percent to $10.39 billion – $1 billion less than what was collected in the 2007-08 fiscal year.

The biggest problem in the general fund will be the income tax, projected to fall 11.9 percent in 2010. The decline in State Education Tax receipts is posing an increasing problem for the School Aid Fund, fueled by falling state equalized value on properties.

“Although we are forecasting some improvement in Michigan’s outlook for fiscal 2011, the increase in combined … revenue is less than 1 percent and the amount of direct money available from the federal stimulus package will be much smaller,” Fulton said. “When it comes time to prepare next year’s budget, lawmakers will be faced with another round of very tough decisions.”

VEHICLE SALES: Vehicle sales from the three Detroit-based automakers are projected to slowly grow in 2010 and 2011, rising by 200,000 each year from the 4.4 million expected in 2009. But because that growth will lag increases from foreign automakers, the Detroit Three’s market share will decline to 39.6 percent by 2011.

One of the presenters was Arthur Schwartz, general director of labor relations at General Motors Company, who went over the wrenching changes for the automaker during its bankruptcy this year.

“Sales down, dealers close, brands disappearing,” he said. “We’ve been through a bad year. I think General Motors has come out this a much strong company. … Everybody is working their tails off to try to make General Motors a success.”

The Michigan numbers he presented were horrifying. Michigan will soon have half as many GM plants as the 58 it had in 1979 and just 21,300 hourly employees compared to the 249,000 it had in 1979. He noted that in 1979, there were more GM workers in Flint alone than in the entire country today.

BUILDING PERMITS: The numbers will slowly improve after falling below 10,000 in 2009, as they approach 2007 level by 2011. However, that would still be 80 percent below what they were in the 1990s and beginning of the decade.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

a>>