ANN ARBOR — Washtenaw County’s economy is expected to outperform much of Michigan over the next three years, with lower unemployment and higher wages—but a slowing growth trend and rising global risks could quickly change that outlook.
The biggest wildcard: escalating tensions involving Iran and their impact on global energy markets.
If conflict drives sustained increases in oil and gasoline prices, the effects could ripple quickly across Michigan’s economy—raising costs for businesses, squeezing consumers and weakening already modest job growth forecasts.
For residents, that could mean higher fuel and utility bills, slower hiring and more pressure on household budgets—even in one of the state’s strongest local economies.
Against that backdrop, a new forecast from the University of Michigan Research Seminar in Quantitative Economics shows Washtenaw County continuing to outperform the state—but at a noticeably slower pace than before the pandemic.
The county’s economic foundation remains strong, anchored by the University of Michigan, Michigan Medicine and Eastern Michigan University.
According to the forecast, Washtenaw County payroll employment is projected to grow 0.2 percent in 2026, 0.5 percent in 2027 and 0.4 percent in 2028, pushing employment above pre-pandemic levels by late 2026.
Michigan’s statewide outlook is weaker, with employment growth of just 0.1 percent in 2026, 0.3 percent in 2027 and 0.4 percent in 2028, while unemployment is expected to rise.
By contrast, Washtenaw County’s unemployment rate is projected to fall to about 4.1 percent by 2028, roughly a full percentage point lower than the statewide rate.
Wages remain another advantage. Washtenaw’s average real wage is expected to reach about $76,600 by 2028, nearly $6,000 higher than the Michigan average.
But the report carries a warning: the county is not expected to return to its pre-pandemic employment trend line, signaling a slower long-term growth trajectory.
Energy Shock Could Hit Michigan First
If tensions in the Middle East escalate, Michigan could feel the impact faster than Washtenaw County.
The state’s economy remains heavily tied to manufacturing, autos, freight and logistics—all sectors sensitive to fuel costs and inflation.
Higher gasoline and diesel prices raise production and shipping costs, reduce consumer spending and can weaken demand for vehicles.
Washtenaw County’s economy—driven by education, health care and research—is more insulated, but not immune. Households would still face higher costs, and small businesses could see margins shrink as consumers pull back.
There is also a longer-term concern: federal funding. Washtenaw’s reliance on research dollars and health care spending makes it vulnerable if federal budgets tighten amid global instability.
A Stronger Economy—But Slower Growth Ahead
The outlook for Washtenaw County is one of relative strength in a slow-growth environment.
The county is expected to continue outperforming Michigan in unemployment, wages and overall stability. But growth is clearly moderating, and external risks are rising.
For Michigan overall, the risks are greater. Slower job growth, rising unemployment and heavier exposure to manufacturing leave the state more vulnerable to economic shocks.
Bottom Line
Washtenaw County remains one of Michigan’s strongest economic engines—but even here, growth is slowing and risks are rising.
And in a global economy increasingly shaped by geopolitical conflict and energy volatility, even the strongest regions are no longer immune.
In a follow-up report, we examine what happens if gas prices hit $5 a gallon and diesel reaches $6.50—and what that could mean for Michigan’s economy.
