LANSING – While those studying the state and national economy remain optimistic regarding growth, the growing uncertainty on federal trade policy has everyone worried, officials said Friday at the Consensus Revenue Estimating Conference.
In presentations Friday, Gabriel Ehrlich and Daniil Manaenkov with the Research Seminar in Quantitative Economics at the University of Michigan had mostly good news regarding the nation’s and state’s economic outlook in the coming years.
Manaenkov, on the U.S. forecast, said the job market is still strong. But he said wage growth is no longer accelerating, which is sign the job market is not as tight as “we thought it was.” He also projected slight decreases in real GDP growth in the coming years, but still showed growth.
And Ehrlich, presenting the state’s economic forecast, showed continued wage and job growth, with that growth slowing slightly in the coming years.
Ehrlich said international trade is the biggest risk for Michigan. He said the possibility of additional tariffs and the potential new agreement between Mexico, Canada and the U.S. are big unknowns.
“This is the seventh time I have had the opportunity to present Michigan’s economic outlook here at this event. We have been consistently optimistic about the outlook in that time and so far the numbers have cooperated with us,” he said. “As an economic forecaster though it is my job to be worried. And I have to confess I am more worried than usual today than I typically have been. Just in light of the uncertainty.”
House Fiscal Agency Director Mary Ann Cleary asked what the state should look out for in terms of tariffs and the other uncertainties.
Manaenkov said he is a little less worried about China than he was in November. Ehrlich said to watch the tone from China moving forward.
“I think, if China starts talking in a very combative way, it is going to be harder for the United States to back down in a sense, or find neutral ground,” he said. “What I worry about is if you start seeing really bellicose language, if things start to spiral and you see tit for tat behavior. It’s a lot harder to come to compromise.”
Other officials agreed. And in a separate presentation, Kristin Dziczek presented the continued trade discussions and potential tariffs as a steamroller that could potentially flatten forecasts related to Michigan’s automotive industry.
If the United States–Mexico–Canada Agreement is ratified, all current tariffs continue and tariffs on auto parts are levied, vehicle prices could increase $2,750 on average with $1,900 on U.S.-built vehicles, Dziczek said.
She also projected those factors, if they hold, would lead to 1.3 million in fewer U.S. sales, a decrease in $43.6 billion in car dealership revenue and a loss of 77,000 dealership jobs and 366,900 jobs within the vehicle sector.
Treasurer Rachael Eubanks said she is not troubled by the projections at this point, but it’s something officials will continue to monitor.
“I think across the board that the uncertainties related to trade continue to persist and have the potential to impact our economy in meaningful ways,” Eubanks told reporters.
Gongwer News Service published this story.