U-M Economic Forecast: Michigan Jobs Losses In 2026, Job Growth In 2027

ANN ARBOR – Gauging the health of Michigan’s economy was difficult even before the federal government shutdown interfered with key data releases. The two key measures of employment, from the payroll and household surveys, have generally trended in opposite directions this year.

Preliminary data suggests a large downward revision is in store for Michigan’s payroll employment. The shutdown has not clarified matters. We project Michigan’s payroll job count to edge lower in 2026, with 2,000 job losses, before growth of 11,300 jobs returns in 2027.

Michigan Map flag on American dollars illustration

Job Losses In Manufacturing Sector

Michigan’s manufacturing sector sheds about 3,000 jobs next year before adding 4,500 the following year with a boost from a looser regulatory environment. Job growth in the government sector slows down but remains positive in each of the next two years.

Unemployment Up

Michigan’s unemployment rate edges up from an estimated 5.3 percent in the fourth quarter of this year to 5.6 percent by the second quarter of 2026 before ticking back down to 5.5 percent in 2027. Personal income per capita grew at a healthy annual pace in the first half of 2025, and we expect it to finish the year with a respectable performance of 3.9 percent growth.

Inflation Up

That pace slows to 3.0 percent next year and 3.2 percent in 2027 amid tepid employment growth. We expect Detroit CPI inflation to slow to 2.0 percent this year, its slowest pace since 2020. Local inflation picks back up to the 2.9–3.0 percent range over the next two years as tariffs continue to work their way into consumer prices.

Disposable Income Up

The combination of slower inflation and healthy nominal income growth boosts real disposable income per capita with 1.6 percent growth this year, well above the recent average. Real disposable income growth slows over the next two years as inflation picks up and job growth slows, but federal tax cuts help to offset some of that drag.

We project growth of 0.2–0.3 percent per year over the next two years. Our forecast brings Michigan’s personal income per capita to $70,300 in 2027, when real disposable income per capita stands 7.3 percent above its 2019 level.

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