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Michigan's job-loss streak is the longest since Great Depression

ANN ARBOR, Mich.—Michigan has endured six straight years of job losses and the next two years will see even more" the longest stretch of employment loss in the state since the Great Depression, say University of Michigan economists.

Since mid-2000 to the end of this year, the state will have lost 336,000 jobs and it will lose another 33,000 jobs in the next two years, they say. Most of these losses are in manufacturing.

Moreover, unemployment in Michigan is projected to rise from an average of 6.8 percent this year to 7.5 percent next year and 7.7 percent in 2008" the highest rates since 1992.

" The Michigan economy is fighting its way through a long stretch of stormy weather, trying to ride out the turbulence generated by the ongoing restructuring among the domestic automakers," said U-M economist George Fulton. " With Big Three market share continuing to decline for 2007 and 2008, auto industry downsizing will not have run its course by mid-2007.

" The Michigan labor market will continue to flounder. Dreary as this outlook may be, we do see some improvement developing over its horizon. By the close of 2008, job growth barely nudges into positive territory."

In their annual forecast of the Michigan economy, Fulton and colleagues Joan Crary and Saul Hymans predict the state will lose 24,000 jobs during 2007 and another 9,000 during 2008" due to heavy job losses in manufacturing.

The state will lose more than 40,000 manufacturing jobs over the course of this year, nearly 30,000 next year and another 24,000 during 2008, they say. The auto industry will account for about 70 percent of these manufacturing job losses.

" The state economy reflects not simply the fortunes of the auto industry as a whole, but in particular, the well-being of the traditional domestic producers, or Big Three" General Motors, Ford and the Chrysler Group," Crary said. " From 2001 to 2005, the Big Three's market share plummeted 7 percentage points. The situation went from bad to worse this year as soaring gasoline prices had consumers tightening their belts and focusing on fuel economy. It now appears that Big Three market share will plunge by nearly 3 percentage points this year."

Despite the continued bleak outlook for manufacturing employment, Michigan's economy will add jobs in other sectors" namely, in services, the forecast shows. After adding more than 20,000 jobs this year, service industries will gain nearly 13,000 jobs during 2007 and just under 17,000 during 2008.

Almost half of these gains will occur in private education and health services, the only major industry to have grown throughout the extended downturn in the Michigan economy. About 40 percent of the additions will come from professional and business services and from leisure and hospitality services over the next two years.

In all, the U-M economists say that in any analysis of Michigan's economic prospects, the " elephant in the room" clearly is the well-being of the Big Three automakers.

" The risks associated with the auto industry remind us of how vulnerable the Michigan economy is to the uncertainties that lately seem to define the domestic companies," Fulton said. " These troubled times in Michigan stress how critical it is for these companies to get their houses in order.

" More to the point, though, these troubled times scream out for a strategy of investing in other activities, activities that show promise in the new economy. The issue is being discussed frequently these days in Michigan, and a fairly compelling argument has been made for investing in a more highly skilled work force and growing the knowledge-based economy. Such a strategy would be in step with the evolving new economy, recognizing that regardless of the fate of the domestic auto industry, we are not going back to the good old days."