Economic Expert Tells Troy Chamber Event He's Cautiously Optimistic About Michigan's Recovery

Declaring "this is the time to act," award-winning economist David Littmann outlined southeast Michigan's for a room full of Troy-area business owners and professionals Thursday morning.

A day after Gov. Rick Snyder's shared his vision for Michigan in his , Littmann told his audience at the that the state is poised for recovery, though businesses will have to make changes to see improvement.

"Thank goodness 2011 saw us rising from the lows to which we had (plummeted) in 2008, 2009," Littmann said. "Now we desperately need the acceleration and sustained upward momentum. Consistent gains and confidence in jobs – those are the prerequisites to a renewed dynamism in our economy."

The annual event, sponsored this year by , was organized by the .

"It is our goal through all of this to be statesmen and to truly raise the bar on our problem-solving capacity," Troy Chamber of Commerce President Michele Hodges said, "because when it comes down to it, it's leadership that can directly influence the status of your economy."

Hodges said she is excited about the turnout for the event, which drew more than 100 attendees, and hopes that business owners will take note of Littmann's message that businesses have the power to influence economic recovery.

"Strong choices can impact our success," Hodges said.

Nowhere to go but up

In recent years, the forecast for Michigan has been stormy at best and downright dismal at its worst. This year, however, Littmann – a senior economist for the Mackinac Center for Public Policy in Midland, MI – said things are starting to look up.

"We've at least bottomed out and have a chance to be on a growth path," Littmann said, adding that he thinks Michigan has the greatest potential for economic improvement of any other state.

"We've been raked over the financial coals, yet we survived, we're on the mend in a variety of industries," he said.

Locally based automakers General Motors, Chrysler and Ford are showing increased sales, Littmann pointed out, and other Michigan industries are showing improvement, too. Recent excellent vehicle sales by Detroit's Big Three "have reversed the plummeting aggregate share of the market," he said.

Improvements still needed

Littmann's positive outlook comes with a caveat. He said that although Michigan is finally showing growth, "we're not on a sustainable growth path right now."

"Will real GDP (gross domestic product) growth for the U.S. rise to 3 percent or more this year? No. ... Is that enough to reduce unemployment rates? Fundamentally, no, but it's going the right way, and it is growth," Littmann said.

"The normal market forces are on the wane, and the political forces seem to be on the ascendancy."

Littmann said the United States' fiscal and monetary policies need to remain stimulative, U.S. trade policies need to become more robust, and the country needs to "aggressively tap its lush, low-cost competitive energy markets" in order to see real, sustainable growth.

One problem Littmann cites is that the state's economy is "on steroids" because of recent legislation meant to prop up the economy.

"We still have an economy that's super vulnerable to internal and external shocks, and it's true that a national election year like 2012 traditionally witnesses literally maniacal efforts at fiscal and monetary policy stimulation."

The economist said the stimulus efforts will prop up the economy for the time being, but it won't be enough in the future.

"Considering that Washington and many of its entitlement programs are fundamentally broke – they're bankrupt – what does our economy do for an encore?"

What's next for Michigan?

Littmann predicts automakers Ford, GM and Chrysler "will be more competitive" this year than ever before – something other businesses should take note of.

But Michigan – and the United States – still faces many challenges, he said, including "the crumbling influence of the U.S. dollar" and "unfunded long-term liabilities."

Flagstar Vice President Michael Tierney said he hoped the chamber's event would help some business owners to be more positive about the state's economic recovery.

"Things are a lot better than they were in 2008 or 2009," Tierney said, "but companies are playing it careful."