michigan economic outlook 2013-14

7/30/2019 Michigan Economic Outlook 2013-14

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For Release: 11/16/20129:30 A.M.

The Michigan Economic Outlook for 20132014

Joan P. Crary, George A. Fulton, and Donald R. GrimesUniversity of Michigan

I. Introduction

For many reasons, its not hard to feel upbeat about the Michigan economy. Were nearly three

years into a solid economic recovery after almost a full decade of recession. Michigan is frequently

referenced in news stories touting its strong standing among other states in job growth and other

economic performance characteristics based on the data index or survey du jour. Our signature auto

sector has been strong throughout the period, and one of Michigans weakest major sectors, housing, is

now showing signs of turning around. In general, the highest wage sectors have recorded the most

rapid growth over the recovery period. And the unemployment rate, which was in the 14 percent range

at the end of 2009, is now around 9 percent. Most important, the fundamentals seem to be in place for

the economy to keep expanding.

For other reasons, its hard not to feel a little disappointed as well. The rebound from the

recession has not been nearly as robust as most past episodes of recovery, and growth recently has

been particularly sluggish. Some sectors such as retail trade are having trouble getting out of first gear,

George A. Fulton, Director

Saul H. Hymans, Director Emeritus

Research Seminar in Quantitative EconomicsUniversity of Michigan Ann Arbor, Michigan

734-764-2567

rsqe.econ.lsa.umich.edu


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2extent of labor underutilization in the state. Recently, the jobless rate reversed its hope-inspiring

downward trend and has floated back up to its reading of last December.

For yet more reasons, its hard not to feel downright troubled. If we switch perspective and

measure progress not from the trough at the end of 2009, but instead from the economic peak in mid-

2000, we then bring into the conversation the deep hole created in the first decade of the 2000s, and

the question of how far we have come in extricating ourselves from that hole. The news is not

encouraging: since the recovery in jobs that began three years ago, the state has regained only one-

fifth of the jobs that had been lost since mid-2000. Over the same period, the states workers have also

lost considerable ground to the nation on wage levels. Its a long haul to crawl out of a deep holebut

at least weve stopped digging in deeper.

In this report, we will examine the states employment and wage situation from a longer-term

perspective, and also consider some of the broader measures of labor underutilization. Our main focus

as always, however, is on our two-year forecast. The more forward-looking questions about the

recovery, such as whether it will be sustained over the next few years, how robust it will be, and the key

industry contributors to our economic health, are all addressed in the forecast section of the report, as

are the state revenue implications.

Before considering our perspective on how the Michigan economy will evolve over the next two

years, we first take a look at 2012, to learn more about what kind of year it has been and to gauge how

well we anticipated this years developments at last years Economic Outlook Conference.

II. Review of the Forecast for 2012

Today marks the forty-first presentation on the outlook for the Michigan economy since the State


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3Table 1

Review of RSQE Forecast of Employment and Incomein the State of Michigan

Percent Change in Michigan Percent Change inWage and Salary Employment Michigan Personal Income

YearRSQE

1RSQE

1

Forecast Observed Forecast Observed

1973 4.6 5.4 9.6 12.3

1974 1.5 0.2 7.4 7.2

1975 1.3 4.3 5.8 6.4

1976 3.4 4.7 12.7 12.6

1977 2.1 4.8 11.4 12.6

1978 2.8 4.8 11.2 11.2

1979 0.6 0.8 8.3 10.0

1980 2.5 5.3 6.1 7.0

1981 2.2 2.3 10.8 7.1

1982 0.9 5.1 7.1 3.0

1983 1.0 0.9 7.0 5.8

1984 5.5 4.9 11.3 10.6

1985 2.6 5.3 8.0 8.4

1986 1.3 2.7 4.8 6.3

1987 1.8 2.1 3.8 3.5

1988 0.3 2.2 3.7 6.2

1989 1.8 2.7 6.4 7.4

1990 1.3 0.6 6.0 4.2

1991 0.4 1.6 5.0 3.2

1992 0.7 0.9 5.1 6.4

1993 0.3 2.0 4.9 5.0

1994 1.1 3.6 4.7 8.0

1995 2.1 3.1 6.4 4.5

1996 1.6 2.0 4.6 4.5

1997 1.6 2.0 5.1 4.9

1998 1.2 1.7 4.8 6.5

1999 1.4 1.6 3.5 4.1

2000 1.4 2.0 5.2 6.1

2001 0.5 2.4 4.6 2.5

2002 0.6 1.7 2.3 1.0

2003 0.3 1.6 3.5 3.7

2004 0.8 0.4 4.9 1.6

2005 0 8 0 2 4 7 2 0


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4At last Novembers Economic Outlook Conference, we foresaw correctly that in 2012 the Michigan

economy would continue its recovery, but at a more subdued pace than occurred in 2011. Based on

the data we were working with at this time a year ago, we forecast that growth would back off in 2012 to

the 0.8 percent rate reported in the last line of the table. With one quarter of data yet to come, our

current estimate is that employment will register a 1.3 percent increase for 2012, half a percentage

point higher than what we forecast a year ago.

It is productive to seek out the sources of our underestimate, and we do so by consulting the

underlying industry data. We find that most of our underestimate of job growth is in two sectors:

manufacturing, and professional and business services. Consistent with our underestimate of job

creation for manufacturing, we were too light on our forecast of both U.S. vehicle output and total light

vehicle sales, and due to the latter, we were too bearish as well on Detroit Three vehicle sales.

Offsetting this to some degree, we were a little too high on the Detroit Threes market share of total light

vehicle sales.

Much of the shortfall in the employment forecast for the professional and business services sector

stems from the interconnectedness of many of its constituent industries with the manufacturing sector,

whose strength we underestimated. Also, the strengthening local economy overall resulted in a more

favorable commercial environment.

On the income side of the ledger, we were also too pessimistic. Based on the data available as of

last November, we forecast a significant slowing in personal income growth, from the rate then of 5.8

percent for 2011 to 3 percent in 2012, a difference of almost 3 percentage points. The rate for 2011


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5Most of the forecast error in personal income can be traced to two factors. First, and most

important, we underestimated growth in the wage and salary disbursement component, the result of

being too light on both employment growth and earnings per worker. Much of the reason we were too

low on earnings per worker is that our largest underestimates of employment were in higher-wage

industries.

Second, we were also too low on the labor-related components of nonwage income, in particular

other labor income and proprietors income.

This review gives us a broad picture of a state economy that continues its upward trajectory in

2012, but that has also cooled off a bit from its pace of a year ago. Before we explore developments

beyond 2012, we need to take a more detailed look at the current state of the economy, and we turn to

that now.

III. Current State of the Economy

Michigan is about to register its third consecutive year of recovery following a nearly decade-long

recession. To better understand where the economy sits at the launching point for our 201314

forecast, we will examine the current recovery in a longer-term context, as we have done in previous

reports. This time, we explore employment and wage movements in Michigan among a range of

establishment size classes, over both the most recent recession and the current recovery to date. The

purpose is to gain some insight into the comparative situations of smaller and larger businesses over

phases of the business cycle, and to learn where the state economy is now positioned as it prepares to

continue moving forward, eleven years after the initial stages of what evolved into the most severe


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6public despite the growing economy, we also consider in this section alternative measures of under-

employment and identify some of the demographic groups that are overrepresented in those measures.

Following that, we focus on 2012 to take a closer look at whats been happening so far during the

year, concentrating this time on our more traditional employment breakout by major industry grouping.

A. Past and Present Employment and Wage Movements by Establishment Size

For our profile on Michigans employment and wage behavior by establishment size, we

assembled a data set from the Quarterly Census of Employment and Wages (QCEW) published by the

Bureau of Labor Statistics, and then compiled series on both private-sector employment and wages by

four establishment size classes for both Michigan and the nation.1 The data on establishment size are

available only for the first quarter of each year, and we selected the first quarters of 2001, 2010, and

2012 for our analysis.

We start by noting a few additional limitations on these data. First, the data are by establishment,

not by firm, and a firm can have more than one establishment. Second, the self-employed are, by

definition, not included in the establishment data, and would be predominantly in the smallest size class

if they were. Third, and perhaps most important, the dynamics over time in employment or wages

within a size class include both growth (or shrinkage) of establishments in that class and movement of

establishments across classes. Both effects are in play, and it is not possible to isolate them, but there

are lessons to be learned from the data nonetheless.

The private-sector employment distribution among the four establishment size classes are shown


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7the nation at that time (24

percent versus 18.9 percent),

and a correspondingly smaller

share in the two smallest size

categories (those under 100

employees). By the first quarter

of 2012, Michigans employment

share in the largest size

category fell substantially, from

24 percent to 20.4 percent.

Although Michigan remains

more big-establishment heavy than the United States, its employment concentrations did shift toward

the smaller establishments over the eleven-year period.

The next table reveals the dynamics behind Table 2. The employment change by size among

establishments is shown over the eleven-year period in Table 3, divided into the interval from the first

quarter of 2001 to the first

quarter of 2010 to represent the

recession in Michigan, and the

interval from the first quarters of

2010 and 2012 to represent the

current recovery period.

Mi hi l t 724 100

RSQE: November 2012

Mich.Employment(Thousands)

U.S.Emp.Share(%)

Mich.Emp.Share(%)

Mich.Employment(Thousands)

U.S.Emp.Share(%)

Mich.Emp.Share

(%)

EstablishmentSizeIntervals

First Quarter 2001 First Quarter 2012

Total 3,783.9 100.0 100.0 3,265.8 100.0 100.0

1 to 19 835.3 22.1 25.0 785.4 24.0 27.2

20 to 99 1,023.6 27.1 29.6 904.4 27.7 30.6

100 to 499 1,017.1 26.9 26.4 908.8 27.8 25.5

500 or more 907.9 24.0 18.9 667.2 20.4 16.6

Table 2

Private-Sector Employment Distribution by Establishment Size

Michigan and the United StatesFirst Quarters of 2001 and 2012

Mich.(Thousands)

U.S.(%)

Mich.(%)

Mich.(Thousands)

U.S.(%)

Mich.(%)

Job ChangeFirst Quarters 200110

Job ChangeFirst Quarters 201012Establishment

SizeIntervals

Table 3

Private-Sector Employment Change by Establishment Size

Michigan and the United States

First Quarters of 200110 and 201012


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8which dropped by 36.3 percent compared with an overall job loss of 19.1 percent. Indeed, employment

in the largest size category fell by more than one job in three over the period (329,500 out of 907,900

jobs in that category), making up just under half of the total job loss over the interval (329,500 of the

724,100 jobs lost). Correspondingly, the smaller size categories did relatively better over the earlier

period in Michigan, posting a smaller, yet nontrivial, pace of decline. The job loss for the United States

over the size classes was much less pronounced: the largest category, which took the brunt of the

losses, was down by 17.7 percent, and the smallest category actually gained jobs.

The mirror image pattern emerges during the state recovery from the first quarters of 2010 to

2012. The largest gains in Michigan show up in the largest establishment size category, allowing it to

creep up from an 18.9 percent employment share in the first quarter of 2010 (not shown in the table) to

20.4 percent two years lateran improvement of 88,800 jobs (15.4 percent) compared with an addition

of 206,100 jobs (6.7 percent) overall. The largest size category expanded much more rapidly in

Michigan than in the United States during this period; thus, Michigan remains more top-heavy in the

largest establishments compared with the nation. To repeat: this expansion in the largest size class

reflects the likely net movement of smaller firms into larger size categories, in addition to job growth

within the largest categories.

This may explain the more

modest growth among the

smaller establishments.

We also investigated

wage behavior among the Mich. Mich.U.S. U.S. U.S.Mich.

First Quarter2001

First Quarter2010

First Quarter2012

Annualized Wage ($)

EstablishmentSizeIntervals

Table 4

Private-Sector Annualized Wage by Establishment Size

Michigan and the United States

First Quarters of 2001, 2010, and 2012


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9for establishments in Michigan and the United States were much the same, although Michigan was

slightly higher in most size classes and exceeded the nation among all classes by 2.9 percent ($38,532

versus $37,436). In both Michigan and the United States, average wages increase monotonically with

increasing size of class.

By 2012q1, wages in every size category are substantially lower in Michigan compared with the

nation, and they are lower overall by 7.9 percent ($47,465 versus $51,541). The ground lost by

Michigan in the largest size class is not surprising, considering the retrenchment of the high-wage auto

sector and related industries over the period. In 2001q1, the annualized wages in Michigan for

establishments with 500 or more employees were 2.1 percent above the U.S. average ($53,847 versus

$52,739); eleven years later, wages were 17.4 percent below the national average ($64,805 versus

$78,414). Less visible is that the lost ground on wages has permeated the smaller establishments as

well.

The slower growth in total wages in Michigan compared with the nation conceivably could reflect

both slower wage growth in the state within size categories, and the larger reduction in the share of the

largest establishments that on average pay the highest wages. On the other hand, shift-share analysis

suggests that almost all of the relative loss reflects the comparatively slower growth in wages within

each size category, and not shifts in composition among categories.

What are the take-aways from this analysis? We suggest that there are four main points:

1. Over the past eleven years, the smaller establishments (those with fewer than 500 employees)

have become a larger share of the work force in both Michigan and the United States.


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103. It remains to be seen whether the retrenchment and restructuring of some of the key large

establishments in Michigan, many of them auto-related, will translate into permanently larger

shares for the smaller establishmentsor whether cyclical movements will transport the work

force to business size configurations more similar to those seen at the end of the past expansion.

4. With respect to wages, Michigan has lost significant ground to the nation over the past eleven

years. This reflects slower wage growth in all of the establishment size classes analyzed here.

B. Labor Underutilization

Another important element of the labor market in Michigans current recovery is the status of the

unemployed. What is clear is that with the expanding economy over the past three years, the officially

measured state unemployment rate has dropped significantly, from a calendar-year average of 13.4

percent in 2009 to 10.3 percent in 2011, and by our estimate, to 8.9 percent in 2012. The recent rates

are still historically high, however, and more to the point in this section, do not reflect the extent of labor

underutilization in the state. In other words, the official, or so-called U-3, measure of the unemployed

excludes residents not officially in the labor force who nonetheless desire work, or who are in the labor

force and desire more work.

We provide some

measure of the magnitude of

these groups in Chart 1, which

shows for calendar-year 2011

estimates of how much the

Chart 1

Alternative Measures of Labor Underutilization

Michigan, 2006 and 2011

2%

4%

6%

8%

10%

12%14%

16%

18%

20%

7.0

10.211.1

12.3

7.48.3

12.0

18.8

2006 2011


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11labor. The U-3 measure for 2011 is 10.2 percent, 0.1 percent lower than the official rate, a difference

that can be written off to arithmetic. We now include in turn the measures for U-4, U-5, and U-6.

When discouraged workers are added to the U-3 measure, forming the U-4 measure, the labor

underutilization rate moves up from 10.2 percent to 11.1 percent. Discouraged workers are people who

are not currently looking for work because they believe that there are no jobs available for them. This

group in Michigan is disproportionately young and male.

The U-5 measure, which adds to the U-4 measure the category all other marginally attached

workers, yields a 12.3 percent rate of labor underutilization. These other marginally attached workers

are people who want a job and have searched for work sometime in the prior year, but have not looked

for work in the past four weeks for reasons such as family responsibilities or transportation problems.

This group in Michigan incorporates youth disproportionately to their share of the population.

The largest addition comes when part-time workers who would prefer to work full-time are

included, spiking the labor underutilization rate to 18.8 percent. The distribution of these involuntarily

part-time workers in Michigan is tilted toward females.

It should be noted that this pattern of labor underutilization is not unique to times of higher

unemployment, but also occurs in periods with lower unemployment. An example, shown in Chart 1,

would be six years ago in 2006.

We now turn to looking at 2012 to see whats been happening to employment so far during the

year, this time focusing specifically on the major industry groupings.


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12pace of 3 percent. Over the following spring and summer quarters, job growth ratcheted back greatly to

a much more subdued annual rate of 0.5 percent, a gain of 9,700 jobs over the two quarters based on

preliminary data for the third quarter. The states job growth is similar to the national pattern so far this

year, and also traces a path similar to the surge-and-pull-back trajectory that occurred in the state in

2011although in neither case is the contrast between the two intervals as pointed as for Michigan in

2012. Initial indications are that there will be some upward revision in the establishment employment

numbers for 2012 when they are put through the annual benchmarking process early next year.

The top job producers so far during 2012 are concentrated in six industries: (1) motor vehicle and

parts manufacturing, 12,400 jobs; (2) professional, scientific, and technical services, 8,400; (3)

accommodation and food services, 6,600; (4) nonvehicle durable manufacturing, 6,200; (5) health and

social services, 5,000; and (6) finance and insurance, 4,400. The dominant supersectors this year, as

they were last year, are manufacturing, led by the auto industry, and professional and business

services, led by the professional, scientific, and technical services industry. Both of these industries are

among the most highly compensated in the Michigan economy. Together with some of the other

industries on the list of top job producers, they contribute to the continuing strength in the higher-wage

segments of the economy during the current recovery.

Several industries have shed jobs so far during 2012, in particular: (1) local government, 5,500

jobs; (2) retail trade, 5,200; (3) construction, 3,200; and (4) other services, 2,100. Local government

continues its downward trend as it adjusts to the stringent budget realities it now faces. The losses in

retail trade reflect the industrys ongoing change to a less labor-intensive way of carrying out its

business. The near-term prospects for construction seem to be more favorable. The loss of


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13Going forward, the prospects for the Michigan economy depend on the ability of the national

economy to gain some momentum over the next two years. Before we offer our perspective on the

final quarter of 2012 and the two years that follow, we first turn to a brief review of the national and local

input assumptions that influence our forecast for Michigan through 2014.

IV. Inputs to the Forecast

Our Michigan forecast depends on the overall health of the national economy, national economic

policy, and a set of assumptions specific to the state model. Major elements of our national forecast

include the following:

In September, the Federal Reserve announced another round of quantitative easingthe

purchase of an additional $40 billion per month of agency mortgage-backed securities. Moreimportant, the Fed modified its forward policy guidance to commit to highly accommodativemonetary policy for a considerable time after the economic recovery strengthens, and indicatedthat the federal funds rate would likely remain low through mid-2015. In our forecast, it remainsbelow 0.25 percent at least through 2014.

The 3-month T-bill rate stays below 20 basis points throughout the forecast. The 30-year

conventional mortgage rate climbs slowly to 3.7 percent by the end of 2013 and reaches 4.1percent by the close of 2014.

The national elections did not significantly shift the balance of power, leaving many of the sameparties responsible for dealing with the significant short- and long-term federal budget issues onthe horizon. On the spending side, Congress agreed to a six-month continuing resolution fundingthe federal government at roughly fiscal 2012 levels through March of next year. On the tax side,however, either the lame duck session will agree on which expiring tax cuts to extend or else the

incoming members of Congress will have to pass new cuts to avoid the fiscal cliff. We assumethat the payroll tax cut will expire at the end of 2012, and that the Bush-era income tax cuts, or anincome tax cut of equivalent size, will be maintained along with temporary cuts to the AlternativeMinimum Tax. We forecast slow growth of federal expenditures over the next two years andmodest tax increases in 2014 as a result of bipartisan desire to reduce the federal deficit. On aNational Income and Product Accounts basis, the federal deficit decreases from $1.1 trillion in


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14 We project output growth to follow an uneven path throughout our forecast horizon. Real GDP

slows this quarter but then accelerates to average 2 percent in 2013 and an improved 2.7 percentin 2014. In each year, expansion slows early due to assumed tax increases and then rebounds in

the second half. Slow growth in disposable income holds consumer spending to a modest 1.9percent growth rate in 2013 before stepping up to a healthier 2.3 percent gain in 2014.

Light vehicle sales and residential building grow quite strongly throughout the forecast; lightvehicle sales reach 15 million units in 2013 and grow by another 600,000 units in 2014, whilehousing starts come up off the floor to register over one million in 2013 and almost 1.4 million in2014.

Business capital spending grows modestly after several slow quarters in 2012. Combinedgovernment purchases fall in real terms over most of the forecast period, but the rate of declineslows as government units make progress on reducing their deficits.

Payroll employment rises by 2.0 million jobs during 2013 and 2.3 million during 2014 (4th quarterto 4th quarter), after a projected gain of 1.9 million this year. The unemployment rate falls steadily

throughout the forecast, reaching 7.6 percent at the end of 2013 and 7.2 percent by the close of2014.

Consumer price inflation remains tame over our forecast horizon. Core CPI inflation (excludingfood and energy prices) picks up to 2.1 percent this year but then settles back to 1.7 percent in2013 and 1.8 percent in 2014. Higher food prices due to the drought cause increases in the all-items CPI slightly ahead of core inflation rates. Headline inflation averages just under 2 percentfor 2013 and 2014.

Some additional assumptions affect the outlook for Michigan, most notably with regard to the

automotive industry. The United Auto Workers and the Detroit Three automakers have entered the

second year of four-year contracts that run to September 2015. Increased pay over the course of the

contracts is in the form of lump sums, with no increase in base wages. A portion of the lump-sum

payment is performance-based. In our forecast we have assumed lump-sum payments that average

$1,300$1,400 per qualified worker across the three companies in each of the years 2012 through

2014 With regard to profit-sharing the current contract follows a new and more generous scheme; we


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15As shown in Chart 2, we

are forecasting that total unit

sales of U.S. light vehicles

cars, minivans, sport utility

vehicles, crossovers, and

pickup truckswill continue to

improve, with a healthy

upward movement from the

12.7 million units recorded in

2011 to 14.3 million this year,

then rising further but at a

slower pace over the next two years, to 15 million in 2013 and 15.6 million in 2014. Pent-up demand is

significant, especially considering that the average age of a vehicle on the road today is at record

levels, and that vehicle sales remain historically low relative to the driving-age population. Sales do not

recover over the forecast period, however, to the 16 to 17+ million units sold annually in the years from

1999 to 2007.

The Detroit Threes share of the light vehicle market moved up two percentage points last year to

46.2 percent, due in part to a temporary boost resulting from the natural disasters in Japan. We see

their share backing off, to 44.4 percent in 2012, before drifting up to 44.7 percent in 2013 and 45

percent in 2014. The projections for total sales and the Detroit Threes share of that market, taken

together, yield our outlook for Detroit Three sales, which move up progressively from 5.9 million units in

2011 t 7 illi i 2014 W d l t f i th t t d ith

Chart 2

U.S. Light Vehicle Sales

Total vs. Detroit Three, 201114

0

2

4

6

8

10

12

14

16

18

Total

2011 2012 20142013

Millions

of Units

15.014.3

12.7

15.6

Detroit Three

5.9 6.46.7 7.0

Annual % Detroit Three

market share

45.044.4 44.7

46.2

RSQE: November 2012


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16V. The Forecast for 20132014

Michigan is now chalking up its third consecutive year of economic recovery, although its pace

has slowed during 2012. The recovery has been led by manufacturing, which in Michigan is the typical

trigger during the earlier stages of economic rebounds. Painting with the broadest brush, we see the

recovery sustained but moderately paced from now through 2014, the endpoint of our forecast period,

with some pickup in activity over the period. This would extend the recovery period to five years,

starting from the labor markets low point at the end of 2009.

The downshift in job

growth for 2012 is apparent

from the data in Chart 3, which

shows the calendar-year

change in wage and salary

employment for Michigan from

2011 through the end of our

forecast period in 2014. With

one quarter of data yet to come,

we are estimating that 2012 will

come in with a gain of 51,800

jobs, well off the pace of the 75,300 job additions posted last year. We see continuing additions to the

job count in 2013 and 2014, at a pace of 37,500 and 57,600 jobs, respectively. The moderate rate of

job creation in these two years reflects both our forecast of a slower rate of increase in Detroit Three

Chart 3

Change in Michigan Wage and Salary

Employment, 201114

20142011 2012 20130

20,000

40,000

60,000

80,000

100,000

Change in

Employment

51,800

37,500

57,600

Total jobs Private-sector jobsRSQE: November 2012

59,100

43,300

62,800

Forecast

75,300

91,900


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17The profile for the job market in the private sector is a little stronger than the total, since the total

is brought down by government employment, which continues to shrink over the forecast period. The

private sector adds more than 59,000 jobs in 2012, followed by gains of about 43,000 and 63,000 in

each of the next two years, respectively. As will be seen shortly, these data based on annual averages

do mask some of the dynamic movements of job creation that are better represented by the quarterly

data path.

Our calendar-year fore-

cast of employment is put in

broader historical context in

Chart 4, which shows the

annual job change in Michigan

since 1940. The job gain of

51,800 estimated for 2012 falls

a little below the average

change of 57,000 jobs per year

recorded from 1971 to 2000,

prior to the extended downturn

of the 2000s. The gain forecast for 2013 would fall well below this benchmark, but job growth in 2014

bounces back to essentially match the benchmark.

Next, we consider the quarterly path of employment over the forecast period, as well as the

underlying industry detail. We start with Chart 5, which shows our projected growth path for payroll

Chart 4

Change in Michigan Wage and Salary

Employment, 19402011

and Forecast, 201214

400

300

200

100

0

100

200

300

Forecast

WW II

Thousands

of Jobs

Average Change

19712000 = 57,000 jobs

40 45 50 55 60 65 70 75 80 85 90 95 00 05 10 14

RSQE: November 2012


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18The left panel of the

chart substantiates a

comment made earlier on the

uneven pattern of growth seen

so far during 2012. A

manufacturing-led surge in job

growth in the first quarter,

spiking at an annual rate of 3

percent, was followed by

considerably weaker spring

and summer quarterssimilar

in pattern to the profile for 2011. Job growth for the middle two quarters of 2012 averaged an annual

rate of one-half of a percentage point, and we anticipate the final quarter of the year to come in at a

similar rate of 0.4 percent, with modest gains in the private sector more than offsetting losses in the

government sector.

The right panel of the chart shows our quarterly forecast path of job growth during 2013 and 2014.

We do see some pickup in the economy going into 2013 and continuing through 2014. Job growth

accelerates from its 0.5 percent pace over the last three quarters of 2012 to 1.2 percent at the

beginning of 2013, holding in that neighborhood throughout most of the year before bumping up its

tempo to settle in around 1.5 percent during 2014. For comparison, the average job growth recorded

over the first two years of the recovery (2009q4 to 2011q4) was 1.6 percent.

4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

0

1

2

3

4

Annual Rate (%)

Chart 5

Michigan Wage and Salary Employment Growth

Actual Forecast

10 2011 20142012 2013

1.5 1.6 1.1 1.2 1.5

57.8 63.8 43.4 49.6 61.5

4th Quarter to 4th Quarter Growth Rate (%)

4th Quarter to 4th Quarter Change (Thousands)

0.8

3.1 3.0

0.7

RSQE: November 2012

1.2 1.21.5

0.4


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19More detail underlying the forecast path for total payroll employment is revealed by the

movements of some of the major sectors that make up the work force. The changes for total wage and

salary employment during 2011 and the forecast years 2012 through 2014, displayed at the bottom of

Chart 5, are duplicated (and rounded) in the first row of Table 5. The rest of the rows show the same

information for major sectors contributing to work force movements.

Michigans signature

sector, manufacturing, has led

the current recovery following

a decade of declining

employment. In the first two

years of the recovery, from the

end of 2009 to the end of

2011 (not shown in the table),

manufacturing contributed

50,000 jobs, more than 40

percent of the net gain in jobs

over that period from a sector that makes up a much smaller 13 percent of the work force. The sector

adds another 16,000 jobs during 2012, but by the second half of 2012 we see manufacturing settling

into a more moderate pace of job creation, contributing an additional 23,000 jobs from the end of 2012

through 2014. That would still amount to 25 percent of the total net additions over the next two years,

double its current share of the total work force.

Table 5

Michigan Wage and Salary Employment Changes

(Thousands of jobs)

2010q4

to

2011q4

2011q4

to

2012q4

2012q4

to

2013q4

2013q4

to

2014q4

Total wage and salary 64 43 50 62

Government 13 5 7 3

Manufacturing 23 16 10 13

Private educ. & health svcs. 11 5 7 8

Professional & business svcs. 28 17 15 12

RSQE: November 2012

Construction 0 1 10 9

Trade, transportation, utilities 9 1 10 13


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20Construction has been plagued in recent years by the plunge in the building market, but we

anticipate some revival in this sector. By our estimate, construction added 3,400 jobs in the second

half of 2012, and we are projecting further gains averaging 9,500 per year over the next two years.

Recent data on the local housing market suggest that it might have begun to turn around. State

residential building permits are on the rise, and the Home Builders Association of Michigan is seeing an

improvement in new home building this year compared with the smaller gains recorded in 2010 and

2011. The home builders attribute the improvement to pent-up demand finally starting to move things

forward, which would bode well for construction employment in the next few years.

Along with manufacturing, the professional and business services sector has been Michigans

other top job producer over the past three years. This broad category includes a wide range of

industries from legal and engineering to temporary help. Much of the impetus for the sectors healthy

job growth in the earlier stages of the recovery emanated from the temporary help industry, but this

year the gains in temporary help have slowed. On the other hand, job growth in the well-compensated

professional, scientific, and technical services component has accelerated; so far during 2012, this

component has contributed five jobs in eight gained in the professional and business services sector.

We are forecasting that the sector will add another 27,000 jobs from the end of 2012 to the close of

2014, a quarter of the jobs gained in total, supported by a still-favorable commercial environment locally

and a continuing expansion of the manufacturing sector.

Almost 90 percent of the private education and health services sector is the health care segment.

This sector has been the most robust in the Michigan economy over the longer term, having added to

employment every year starting in 1999in fact, the only major sector to have done so. We see this


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21Trade, transportation, and utilities (TTU) is the largest supersector in the Michigan economy,

consisting of both wholesale and retail trade, local transportation, and public utilities. After gaining

9,000 jobs during 2011, the sector gravitated to the negative side of the ledger in 2012, by our estimate

losing 1,000 jobs, with the losses concentrated in the beleaguered retail trade industry. We are

forecasting a bounce-back in 2013 for TTU, to job gains similar to those posted in 2011, as we see

some modest recovery in retail while other components of TTUwholesale trade, trucking, and

warehousingcontinue to benefit from their tie-ins to the expanding manufacturing sector.

The government sector has lost jobs in every year starting with 2003, and we are projecting that

trend to continue through the forecast period, with job losses of 5,000 during 2012 and 7,000 in 2013,

slowing to 3,000 in 2014 as all levels of government continue to adjust to their new budget realities. If

our forecast proves correct, there would be 91,000 fewer public-sector positions in the state at the end

of 2014 than twelve years earlier, at the end of 2002.

Overall, though, this is a good news story: the recovery continues for two more years, and activity

levels see some pickup over the periodthus cumulating to five years of growth after a decade of

decline. But how much ground are we making up in the recovery relative to what we lost? This is the

historical context question, when we assess our progress from the previous peak rather than from the

most recent troughand here the news is decidedly more somber.

The quarterly path of establishment employment from the start of 2000 to the end of 2014 is

shown in Chart 6, which neatly summarizes Michigans recent economic history and our view of its

near-term future. The dramatic decline in jobs from the states peak employment quarter in the spring


22/55

22downturn through 2014. That

would replenish one-third of the

jobs lost from mid-2000 to the

end of 2009progress indeed,

but also leaving us with a great

deal of ground still to be made

up.

There is also room for

improvement in the prospects

for the unemployed. The

Michigan unemployment rate came in at 9.3 percent for September 2012, a drop of 1.1 percentage

points since the previous September reading (comparable to the decline in the U.S. rate). But that

does not tell the story of the underlying dynamics. From July 2011 to April 2012, the Michigan rate fell

in every month, to 8.3 percent last April, a drop of 2.3 percentage points. Since then it rose in every

month until reaching 9.4 percent in August, an increase of 1.1 percentage points, before ticking down in

September. The net result of these down-then-up movements is that the Michigan rate is now the

same as it was last December. The gap between the Michigan rate and the lower U.S. rate had shrunk

to two-tenths of a percentage point by April, but it has now widened to 1.5 percentage points by

September.

We are forecasting that the state unemployment rate will tick down from its September reading of

9.3 percent to average 9.1 percent in the closing quarter of 2012, as shown in the box at the bottom of

Chart 6

Michigan Wage and Salary Employment

First Quarter of 2000 to Fourth Quarter of 2014

3,800

3,900

4,000

4,100

4,200

4,300

4,400

4,500

4,600

4,700

4,800

Forecast

Thousands of jobs

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Trough 09q4

12q3

14q4

Peak 00q2

RSQE: November 2012


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23The labor force appears

to have reversed its five-year

slide at the beginning of 2012,

although the jury might still be

out on that one. Regardless,

we are forecasting a growing

labor force over the next two

years, as additional job

seekers are drawn in by

improving job opportunities

and that slows the decline in

the unemployment rate. As indicated in the U.S. forecast report, longer-term demographic trends can

be expected to soften a labor force recovery motivated by economic factors.

As shown in Chart 7, our forecast path for the state unemployment rate translates into calendar-

year averages of 8.9 percent for 2012, 8.7 percent for 2013, and 8 percent for 2014, following a rate of

10.3 percent for 2011.

The calendar-year jobless

rates we are forecasting for

2012 to 2014 are put in

historical context in Chart 8,

which shows the Michigan

0%

2%

4%

6%

8%

10%

12%

Chart 7

Michigan Unemployment Rate

201114

9.6 9.1 8.4 7.7

4th Quarter Unemployment Rate

10.3

8.9 8.78.0

2011 2012 2013 2014

RSQE: November 2012

Chart 8

Michigan Unemployment Rate, 19702011

and Forecast, 201214

10%

12%

14%

16%Forecast

Average Unemployment Rate

19702008 = 7.9%


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242014 they gravitate down to a rate similar to the 7.9 percent averaged from 1970 to 2008.

Our forecast of inflation

and income growth is provided

in Chart 9. Local inflation,

measured by the growth rate of

the Detroit CPI, is shown in the

first panel. Inflation spiked to

3.3 percent in 2011, spurred by

a run-up in food and energy

prices. It backs off to 1.9

percent in 2012 and remains

subdued for the rest of the

forecast period, ticking down to 1.8 percent for both 2013 and 2014. Although the recent drought is

projected to raise food prices in 2013, fairly moderate economic growth in a high-unemployment

environment keeps inflation in check. Local inflation runs one-tenth of a percentage point below the

national rate in 2013 and 2014.

The income side of our forecast is summarized in the other panels of Chart 9. Personal income

growth decelerates from 5.6 percent in 2011 to 3.8 percent in 2012, corresponding with calendar-year

job growth that slows by seven-tenths of a percentage pointincluding a softening in the higher-paying

industriesand weaker growth in total nonwage income. Income growth slows further in 2013, to 2.6

percent, for the same reasons. With some pickup in employment and nonwage income growth in 2014,

Personal Income

0%

1%

2%

3%

4%

5%

6%

7%

5.6

3.8

2.6

4.5

Detroit CPI

2011 2012 2013 2014

Chart 9

Michigan Inflation and Income Growth

RSQE:November 2012

0%

1%

2%

3%

4%

5%

6%

7%

3.3

1.9 1.8 1.8

Real Disposable Income

1.11.5

0.5

1.8

0%

1%

2%

3%

4%

5%

6%

7%


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25Growth in purchasing power then decelerates to 0.5 percent in 2013 with further weakening of nominal

income growth and a small increase in the growth of federal taxes. Growth in purchasing power

rebounds in 2014, to 1.8 percent, following the same pattern as nominal income growth.

Our income forecast has implications for the state revenue outlook, to which we now turn.

VI. The State Revenue Outlook

Last years tax reform legislation made major changes to the personal income tax and to the

primary tax paid by businesses. The net effect of those changes is a reduction in combined general

fund general purpose (GFGP) and school aid fund (SAF) revenue. In addition, taxes are shifted from

businesses to individuals and from the school aid fund to the general fund. In June of 2012, the

legislature enacted some temporary tax relief for individuals by accelerating a scheduled reduction in

the income tax rate and by raising the standard personal exemption.

Under current law (including tax reform and the June tax cut), the personal income tax rate

dropped by one-tenth of a percentage point, to 4.25 percent, on October 1three months sooner than

under the tax reform plan. The rate is then scheduled to remain at 4.25 percent. In addition, the

personal exemption, which had been $3,700 since the beginning of 2011, rose to $3,950 on October 1,

2012, and is scheduled to rise to $4,000 at the beginning of 2014. The personal exemption remains at

that level until the amount as calculated under prior law exceeds $4,000. All of the eliminations or

modifications to other exemptions and deductions that were part of tax reform are still in force, and the

phased-in taxation of pension income that began January 1, 2012, is proceeding as scheduled.


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26On the business side, as of January 1 the Michigan Business Tax (MBT) was replaced with a

corporate income or profits tax that applies only to businesses organized as a traditional corporation (C-

corporation) under federal tax rules. The corporate tax disallows nearly all the credits offered under the

MBT, but some of the credits under the MBT are valid over a number of years. Those wishing to take

advantage of certain firm-specific credits may continue to pay taxes under the MBT until the credits are

exhausted, which could take a number of years. A portion of the MBT was earmarked for the SAF, but

as of fiscal 2012, all MBT and corporate income tax revenue accrues to the general fund. In total, the

new legislation reduced business tax revenue by about $1.01 billion in fiscal 2012. The business tax

cuts then grow to $1.64 billion in fiscal 2013 and $1.75 billion in fiscal 2014.

Two other pieces of legislation passed in June 2012 will result in a one-time shift in a portion of

sales tax revenue in fiscal 2013. To provide additional state funding to leverage federal aid for

highways, $100 million of sales tax revenue from motor fuel sales will be earmarked for the State

Trunkline Fund. In addition, $10 million from the tax on sales of aviation fuel will be designated for the

Aeronautics Fund. The two earmarks will reduce GFGP sales tax revenue.

Our forecast of state revenues for fiscal years 201314 is presented in Table 6. The upper

portion details general fund general purpose revenues, and the lower portion summarizes school aid

fund revenues. Based on preliminary data, GFGP income tax revenue rose by 8.7 percent in fiscal

2012, bolstered by withholding on pension income and quarterly estimated payments that reflected the

increase in tax liability under tax reform. We anticipate a surge in income tax revenue in fiscal 2013 as

annual payments for the 2012 tax year also reflect the tax changes. By fiscal 2014, the increase in

income tax revenue moderates to move more in line with taxable income growth. The vast majority of

27


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27Table 6

State Revenues by Fiscal Year(Millions of dollars, except as noted)

Actual RSQE Forecast

2011 2012P 2013 2014

General Fund General Purpose

Personal income tax 4445 4833 5552 5869

(% change) (20.3) (8.7) (14.9) (5.7)

Consumption taxes 2083 2157 2125 2293(% change) (1.2) (3.6) (1.5) (7.9)

Sales 1067 1092 1013 1153

Use 734 782 835 868

Other consumption 282 284 278 272

Business taxes 1678 1585 697 694

(% change) (15.5) (5.5) (56.0) (0.3)

MBT/SBT/Corporate Income 1347 1232 332 318

Other business 331 353 365 376

Other GFGP taxes 69 41 48 51

(% change) (18.8) (40.6) (17.5) (7.0)

GFGP tax revenue 8274 8616 8422 8908

(% change) (12.7) (4.1) (2.3) (5.8)

Nontax revenue 539 467 355 332GFGP revenue 8813 9083 8777 9241

(% change) (14.3) (3.1) (3.4) (5.3)

School Aid Fund

SAF taxes 10521 10118 10363 10659

(% change) (4.0) (3.8) (2.4) (2.9)

Lottery transfer 727 770 745 739

(% change) (3.7) (5.9) (3.3) (0.8)

Earmarked state SAF revenue 11248 10888 11108 11398

(% change) (4.0) (3.2) (2.0) (2.6)

28


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28per year in fiscal 2013 and 2014, but the one-time earmark of transportation-related sales tax revenue

yields a 1.5 percent drop in GFGP consumption tax revenue in fiscal 2013 followed by roughly an 8

percent gain the following year.

Most of the movement in business tax revenue through fiscal 2013 comes from changes in the

Single Business Tax (SBT)/MBT/corporate income tax. According to preliminary data, combined

revenue from the MBT and corporate income tax, net of any lingering refunds under the SBT, totaled

$1.23 billion in fiscal 2012 as taxpayers settled up their MBT liability for the 2011 tax year and began

making their estimated payments under the corporate income tax for the 2012 tax year. Some firms

are expected to file taxes under the MBT in future years to take advantage of outstanding credits.

When the implied MBT refunds are combined with a full year of corporate income tax collections,

revenue shrinks to $332 million for fiscal 2013 and to $318 million the following year. Business taxes

including taxes on insurance companies and on oil and natural gas extractionfell by 5.5 percent in

fiscal 2012 and are projected to plummet by more than 50 percent in fiscal 2013. In 2014, business tax

revenue dips by 0.3 percent.

GFGP revenue rose by 3.1 percent, to $9.1 billion, in fiscal 2012. All of that gain is wiped out in

fiscal 2013the result of a full year of business tax cuts and a sharp drop in nontax revenue. GFGP

revenue then rises by 5.3 percent in fiscal 2014, to $9.24 billion.

For the fiscal year just ended, revenue earmarked for the school aid fund dropped by 3.2 percent.

The loss of designated MBT revenue$739 million in fiscal 2011more than accounts for the falloff.

Among the major sources of SAF revenue, sales, use, and individual income taxes are all projected to

29


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29VII. Conclusion

A. Summary of the Outlook

First, the good news. The Michigan economy is on the verge of completing its third year of

recovery, and we see that recovery continuing over the next two years, with some pickup in activity

over the period. Specifically, we are forecasting progressively increasing job gains through 2014,

amounting to 43,400 from the end of 2011 to the end of 2012, followed by additions of 49,600 during

2013 and 61,500 during 2014. As is typical in Michigan, the recovery has been led by manufacturing,

featuring a reborn auto industry, with a number of the other higher-wage sectors such as professional

and scientific services making major contributions.

Second, the less-good-but-not-bad news. The pace of recovery slowed in 2012, the 43,400 jobs

added over the year being considerably less than the gains of 57,800 and 63,800 posted during 2010

and 2011, respectively. And much of the growth in 2012 occurred early, in the first quarter of the year.

The job gains we anticipate over the next two years, while accelerating, would still be characterized as

moderate.

We are forecasting that improvements in the job market will allow the Michigan unemployment

rate to drift down from the 9.3 percent rate it posted in September of this year to 8.4 percent at the end

of 2013 and 7.7 percent at yearend 2014, at which point it will be five-tenths of a percentage point

above the U.S. rate. The jobless rates over the forecast period are on the high side historically, but by

mid-2014 they gravitate down to rates similar to the 7.9 percent averaged from 1970 to 2008.

30


30/55

30those related to the national outlook and those that pertain to the auto and housing sectors and the

labor market.

Risks associated with the national outlook. The risks highlighted in the current U.S. outlook

are also matters of concern for the state forecast. The Michigan economy seems a little more coupled

to the national economy in the past few years than it has been for a while. Domestically, important

sources of uncertainty identified in the U.S. forecast include risks related to the housing market, and the

fiscal cliff. Internationally, the primary risks pertain to the continuing evolution of the situation in the

Eurozone and the possibility of an even more significant slowdown of growth in the Chinese economy.

Risks associated with the auto sector. This item is permanently on Michigans risk list because

of the industrys dominance in the state economy, and its interdependence among many local

industries. While we are projecting the auto industry to continue growing over the forecast period, we

also anticipate that it will do so at a slower pace. To the extent that Detroit Three sales show greater

strength than we expect, due to the effects of pent-up demand and the aging fleet now on the road, as

well as some easing of credit standards, the auto sector could outperform our forecast.

Risks associated with the housing sector. The movements of this sector are particularly

difficult to peg, both nationally and locally, but they are important to gauging our economic prospects.

For example, and particularly relevant to Michigan, Morgan Stanley recently estimated that in 2013,

every 100,000 in new housing starts would translate into 300,000 vehicle sales. Recent data on the

local housing market, including the Case-Shiller home price index for Detroit as well as statewide

residential building permits, suggest the long-awaited turnaround in housing may have begun. This is

31


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31Risks associated with labor market movements. Michigans labor force growth has been

notoriously difficult to forecast, and how accurate we are in doing so affects our success in pinning

down the path of the unemployment rate. It appears that the labor force has turned the corner in 2012,

growing again after five years of unabated decline, but this evidence is far from conclusive. Our

forecast is for continued growth in the labor force over the next two years, softening declines in the

unemployment rate. If job seekers do not return to the labor force in the numbers we anticipate, the

unemployment rate could drop more rapidly than we are currently forecasting. Complicating the

tracking of labor force movements is the nontrivial effect that demographic changes are having on

participation rates.

C. Closing Thoughts

If we assess where the Michigan economy is now and where we will be in 2014 from the

reference point of the previous peak in mid-2000, we are reminded of how deep a hole we are digging

out of. If our forecast proves correct, with five years of recovery to the end of 2014 we would replenish

only one-third of the jobs lost from mid-2000 to the end of 2009. And the debilitating state recession

that dragged on for almost a decade also caused us to lose significant ground to the nation on wage

levels, moving from a position a little above the U.S. average in 2001 to a position well below in 2012.

A lingering concern is that the unprecedented hit taken by the state economy during the first decade of

the 2000s may have left us with some permanent damageor at least with an overlong period of

recovery. Nevertheless, it is heartening that we are making forward progress now, and at rates of job

growth exceeding most other states.

32


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Constant Adjustments in the RSQE Control Forecast for 20132014

The following adjustments have been used to correct for level drift and start-up error:

A.AEQGM Average Earnings per Quarter, Government

A.AEQPM Average Earnings per Quarter, PrivateA.BLDPER Residential Building PermitsA.ECCM Employment, ConstructionA.EFINM Employment, Financial ActivitiesA.EINFM Employment, InformationA.EMFOM Employment, Manufacturing other than Transportation EquipmentA.EMIM Employment, Natural Resources and MiningA.EMRESM Difference between Household and Payroll Survey EmploymentA.EMTEQM Employment, Transportation Equipment Manufacturing

A.ESBM Employment, Professional and Business ServicesA.ESHM Employment, Education and Health ServicesA.ESLM Employment, Leisure and HospitalityA.ESOM Employment, Other ServicesA.ETTUM Employment; Trade, Transportation, and UtilitiesA.HOUSEM Existing Single-Family Home SalesA.HRSM Average Weekly Hours, ManufacturingA.LFM Labor ForceA.PAAAGA Retail Price of GasolineA.PDIESE Price of Diesel FuelA.PSTKNR Current Cost Price Index, U.S. Nonresidential Capital StockA.SEVNR State Equalized Value for Real Nonresidential PropertyA.SEVR State Equalized Value for Real Residential PropertyA.STKNR0 Real U.S. Nonresidential Capital StockA.TBWMNS Beer and Wine Tax RevenuesA.TCIGMN Cigarette and Tobacco Tax RevenuesA.TCTF Comprehensive Transportation Fund RevenuesA.TDIESE Diesel Fuel Tax RevenuesA.TGASMN Gasoline Tax Revenues

A.TLIQMN Liquor Specific Tax RevenuesA.TOILM Oil and Gas Severance Tax RevenuesA.TRET Real Estate Transfer Tax RevenuesA.TRSNVM Sales Tax Revenues, OtherA.TRSVM9 Sales Tax Revenues, AutoA.TSEP State Education Property Tax RevenuesA.TUPM Utility Property Tax RevenuesA.TUSEMN Use Tax RevenuesA.TVEHRE Vehicle Registration Tax Revenues

A.WM Average Hourly Earnings, ManufacturingA.WUS Average Hourly Earnings, U.S. ManufacturingA.YENTM Proprietors IncomeA.YOLM Other Labor IncomeA.YPRM Dividends, Interest, and Rental IncomeA.YUCTRM Unemployment Benefits

The Michigan Economic Outlook for 2013-2014


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RSQE Forecast, 16 November 2012

The State of Michigan

I N D E X O F T A B L E S

Table 1: Michigan Personal Income

Table 2: Employment in Michigan

Table 3: State of Michigan GFGP Revenue

Table 4: State of Michigan SAF and Transportation Tax Revenue

Table 5: Selected State of Michigan Tax Revenues

Complete Model Output

Non-zero Adjustment ConstantsExogenous VariablesEndogenous VariablesGrowth Rates of Endogenous Variables

Forecast Based onThe Econometric Model of the State of Michigan

RSQEResearch Seminar in Quantitative Economics

The University of MichiganAnn Arbor, Michigan 48109

RSQE Forecast Table 1 16 November 2012

Michigan Personal Income


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c ga e so a co e

(Millions of Current Dollars, SAQR)

Actual Forecast

2012q3 2012q4 2013q1 2013q2 2013q3 2013q4 2014q1 2014q2 2014q3

Personal Income 93247.58 94044.66 93973.94 94893.57 95804.99 96769.49 98094.78 99105.64 100106.16

Wage and Salary 47805.00 48091.30 48493.10 48971.15 49384.71 49883.17 50363.45 50885.49 51333.94Private 40380.25 40678.75 41055.69 41510.41 41898.87 42411.02 42859.29 43348.66 43762.88Government 7424.71 7412.55 7437.42 7460.74 7485.84 7472.15 7504.15 7536.83 7571.06

Other Labor Income 11565.00 11623.17 11719.96 11796.89 11880.56 11966.92 12089.10 12178.65 12275.19

Proprietors Income 6663.00 6766.04 6874.37 6970.62 7074.63 7182.28 7286.69 7396.69 7511.31

Property Income 12864.00 13054.96 13191.34 13304.48 13462.47 13594.74 13721.01 13856.92 14051.64

Transfer Payments 20918.20 21093.14 21249.48 21446.96 21651.07 21843.25 22469.11 22670.98 22875.08

Residence Adjustment 464.50 469.08 473.70 478.37 483.08 487.84 492.65 497.50 502.40

Less:Social Ins Contrib 7032.10 7053.04 8028.01 8074.90 8131.52 8188.70 8327.22 8380.59 8443.40

Less:Federal Pers Taxes 7889.69 7968.84 8227.34 8347.37 8473.18 8605.02 9295.36 9431.09 9572.16Mich Withholding 1986.00 1892.16 1939.35 1944.37 2002.66 1970.47 2016.80 2023.79 2083.57

Equals:

Disp Personal Income 83371.89 84183.66 83807.25 84601.84 85329.15 86194.00 86782.62 87650.76 88450.42

ADDENDA:Consumer Price Index

Detroit 1982-84=100 216.37 217.23 218.22 219.24 220.21 221.14 222.08 223.07 224.14

Real Disposable IncomeMillions of 1982-84 $ 38532.10 38753.99 38404.11 38588.32 38749.50 38976.91 39077.54 39292.29 39462.71


Michigan Personal Income


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g

(Millions of Current Dollars, SAQR)

Forecast Calendar Years Percent Changes

2014q4 2011 2012 2013 2014 2011-2012 2012-2013 2013-2014

Personal Income 101185.74 358151.75 371676.49 381442.00 398492.32 3.78 2.63 4.47

Wage and Salary 51837.73 183000.25 190458.30 196732.14 204420.60 4.08 3.29 3.91Private 44240.42 154084.50 160907.74 166875.98 174211.26 4.43 3.71 4.40Government 7597.31 28915.75 29550.52 29856.15 30209.34 2.20 1.03 1.18

Other Labor Income 12367.54 44396.00 46074.92 47364.32 48910.48 3.78 2.80 3.26

Proprietors Income 7627.69 25069.25 26526.54 28101.89 29822.38 5.81 5.94 6.12

Property Income 14255.68 49359.00 51352.96 53553.03 55885.26 4.04 4.28 4.35

Transfer Payments 23092.05 81711.50 83442.34 86190.75 91107.22 2.12 3.29 5.70

Residence Adjustment 507.35 1769.50 1849.58 1922.99 1999.90 4.53 3.97 4.00

Less:Social Ins Contrib 8502.30 27153.50 28028.14 32423.13 33653.52 3.22 15.68 3.79

Less:Federal Pers Taxes 9720.70 29416.07 31401.98 33652.92 38019.31 6.75 7.17 12.97Mich Withholding 2051.31 7220.10 7810.96 7856.85 8175.47 8.18 0.59 4.06

Equals:

Disp Personal Income 89413.74 321515.58 332463.56 339932.23 352297.54 3.41 2.25 3.64

ADDENDA:Consumer Price Index

Detroit 1982-84=100 225.24 211.87 215.85 219.70 223.63 1.88 1.79 1.79

Real Disposable IncomeMillions of 1982-84 $ 39697.58 151767.87 154024.63 154718.84 157530.11 1.49 0.45 1.82


Employment in Michigan


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(Thousands of Persons, Seasonally Adjusted)

Actual Forecast

2012q3 2012q4 2013q1 2013q2 2013q3 2013q4 2014q1 2014q2 2014q3

Total Employment 4231.50 4239.75 4252.46 4265.88 4279.67 4292.87 4308.44 4323.71 4339.77

Wage and Salary 3991.60 3995.56 4007.07 4019.23 4032.75 4045.14 4061.01 4075.81 4091.30

Private 3379.10 3386.96 3399.47 3412.63 3427.15 3443.54 3459.91 3475.21 3491.20Nat. Res. & Mining 7.50 7.50 7.45 7.40 7.38 7.38 7.40 7.41 7.40Construction 120.50 122.23 124.15 126.54 129.16 131.92 134.44 136.80 139.10Manufacturing 526.60 524.74 526.49 528.48 531.07 534.42 537.88 541.08 544.26Trans. Equipment 152.10 148.68 149.25 150.18 151.44 152.96 154.46 155.96 157.51Other Mfg. 374.60 376.06 377.23 378.30 379.63 381.46 383.43 385.13 386.75

Trade, Trans. & Util. 720.90 722.37 725.07 727.01 729.28 731.98 735.18 738.26 741.50Information 54.40 53.80 53.73 53.67 53.64 53.61 53.62 53.63 53.66

Financial Activities 200.10 200.96 201.73 202.50 203.23 203.98 204.65 205.35 206.02Prof. & Bus. Serv. 570.50 574.34 577.99 581.75 585.43 589.34 592.68 595.27 598.33Edu. & Health Serv. 630.40 630.97 632.43 634.33 636.30 638.29 640.32 642.36 644.42Leisure & Hospitality 380.70 381.74 381.93 382.37 382.98 383.80 384.67 385.69 386.81Other Services 167.50 168.31 168.50 168.57 168.68 168.80 169.07 169.35 169.68

Government 612.60 608.60 607.60 606.60 605.60 601.60 601.10 600.60 600.10

Non Wage and Salary 239.90 244.18 245.39 246.65 246.93 247.73 247.43 247.90 248.47

Labor Force 4661.60 4665.47 4670.25 4676.16 4681.95 4688.13 4695.09 4702.93 4711.05

Unemployment 430.10 425.72 417.80 410.28 402.27 395.26 386.65 379.22 371.28

Unemployment Rate (%) 9.23 9.13 8.95 8.77 8.59 8.43 8.24 8.06 7.88

ADDENDA: U.S. DATA(Billions of chained 2005 $,

except where noted)

Gross Domestic Prod 13616.20 13662.42 13735.41 13810.08 13897.94 13990.11 14075.76 14164.90 14272.50Business Fixed Invest 1478.20 1488.59 1506.03 1523.00 1544.28 1567.74 1589.12 1612.87 1639.16

Gross Vehicle Product 393.50 390.02 395.75 402.50 411.50 419.93 422.08 427.01 435.31Personal Cons Expend

New Autos + Trucks 218.70 223.81 227.13 229.86 234.54 238.48 237.68 240.61 245.56Light Vehicle Sales (mil) 14.46 14.63 14.70 14.85 15.12 15.35 15.26 15.42 15.70

Unemployment Rate (%) 8.05 7.85 7.77 7.71 7.67 7.62 7.55 7.47 7.35Personal Consumption

Deflator 2005=100 116.01 116.45 116.94 117.45 117.95 118.44 118.94 119.45 119.97Consumer Price Index

1982-84=100 230.30 230.25 231.77 234.45 234.77 234.70 236.17 238.88 239.28


Employment in Michigan


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(Thousands of Persons, Seasonally Adjusted)

Forecast Calendar Years Percent Changes

2014q4 2011 2012 2013 2014 2011-2012 2012-2013 2013-2014

Total Employment 4355.85 4177.08 4243.86 4272.72 4331.94 1.60 0.68 1.39

Wage and Salary 4106.66 3936.73 3988.52 4026.05 4083.70 1.32 0.94 1.43

Private 3507.56 3318.25 3377.37 3420.70 3483.47 1.78 1.28 1.84Nat. Res. & Mining 7.39 7.35 7.43 7.41 7.40 1.03 -0.28 -0.07Construction 141.22 124.90 121.36 127.94 137.89 -2.84 5.42 7.78Manufacturing 547.53 504.30 525.49 530.11 542.69 4.20 0.88 2.37Trans. Equipment 159.02 140.35 148.47 150.96 156.74 5.79 1.67 3.83Other Mfg. 388.51 363.95 377.02 379.16 385.95 3.59 0.57 1.79

Trade, Trans. & Util. 744.73 721.10 721.64 728.34 739.92 0.08 0.93 1.59Information 53.72 53.53 53.55 53.67 53.66 0.05 0.21 -0.01

Financial Activities 206.73 193.18 198.74 202.86 205.68 2.88 2.07 1.39Prof. & Bus. Serv. 601.65 550.48 571.29 583.63 596.98 3.78 2.16 2.29Edu. & Health Serv. 646.50 620.28 629.54 635.34 643.40 1.49 0.92 1.27Leisure & Hospitality 388.08 375.45 380.13 382.77 386.31 1.25 0.69 0.93Other Services 170.01 167.65 168.23 168.64 169.53 0.34 0.25 0.53

Government 599.10 618.50 611.20 605.35 600.23 -1.18 -0.96 -0.85

Non Wage and Salary 249.18 240.35 255.35 246.67 248.25 6.24 -3.40 0.64

Labor Force 4719.47 4657.80 4658.64 4679.12 4707.13 0.02 0.44 0.60

Unemployment 363.62 480.70 414.76 406.40 375.19 -13.72 -2.01 -7.68

Unemployment Rate (%) 7.70 10.32 8.90 8.69 7.97 NA NA NA

ADDENDA: U.S. DATA(Billions of chained 2005 $,

except where noted)

Gross Domestic Prod 14372.55 13299.10 13583.38 13858.38 14221.43 2.14 2.02 2.62Business Fixed Invest 1665.99 1378.15 1479.92 1535.26 1626.79 7.38 3.74 5.96

Gross Vehicle Product 440.83 361.50 399.38 407.42 431.31 10.48 2.01 5.86Personal Cons Expend

New Autos + Trucks 248.13 198.35 220.28 232.50 242.99 11.06 5.55 4.51Light Vehicle Sales (mil) 15.82 12.73 14.34 15.00 15.55 12.60 4.65 3.64

Unemployment Rate (%) 7.23 8.95 8.08 7.69 7.40 NA NA NAPersonal Consumption

Deflator 2005=100 120.49 113.79 115.81 117.70 119.71 1.78 1.63 1.71Consumer Price Index

1982-84=100 239.34 224.94 229.56 233.92 238.42 2.05 1.90 1.92


State of Michigan GFGP Revenue by Fiscal Years


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(Millions of Current Dollars, NSA)

Actual Forecast

2012q3 2012q4 2013q1 2013q2 2013q3 2013q4 2014q1 2014q2

NET PERS INCOME TAX 1610.00 1872.65 1744.34 2376.25 1781.50 1964.79 1837.69 2515.56Less: School Aid 494.50 528.34 521.47 660.16 511.82 549.89 543.00 694.98

Camp Fund 1.00 0.00 0.00 0.00 1.00 0.00 0.00 0.00GFGP INCOME TAX 1114.50 1344.31 1222.87 1716.09 1268.68 1414.89 1294.69 1820.58

CONSUMPTION TAXESSales 288.65 283.63 243.59 295.40 190.05 291.00 249.55 303.87Cigarette Excise 50.60 45.94 43.25 47.26 48.63 44.30 41.83 45.79Beer and Wine 14.50 12.17 10.45 14.13 14.48 12.16 10.44 14.11Liquor Specific 10.10 11.41 9.00 10.95 10.24 11.53 9.11 11.05Use 197.30 206.23 199.09 215.33 214.22 211.96 207.14 224.76

GFGP CONSUM TAXES 561.15 559.38 505.37 583.07 477.62 570.96 518.07 599.59

BUSINESS TAXESSingle Business -57.30 0.00 0.00 0.00 0.00 0.00 0.00 0.00Michigan Business 763.60 0.00 0.00 0.00 -527.40 0.00 0.00 0.00Corporate Income 525.60 0.00 0.00 0.00 858.90 0.00 0.00 0.00Insur Co Premium 300.00 0.00 0.00 0.00 311.40 0.00 0.00 0.00Oil + Gas Severance 11.70 12.65 14.46 13.49 13.15 13.88 15.00 14.10Casino 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

GFGP BUSINESS TAXES 1543.60 12.65 14.46 13.49 656.05 13.88 15.00 14.10

PROPERTY TAXESInheritance 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Utility Property 58.20 0.00 0.00 0.00 58.55 0.00 0.00 0.00Intangibles 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00GFGP PROPERTY TAXES 58.20 0.00 0.00 0.00 58.55 0.00 0.00 0.00

OTHER GFGP TAXES -17.30 0.00 0.00 0.00 -10.50 0.00 0.00 0.00

TOTAL GFGP TAXES 3260.15 1916.34 1742.70 2312.66 2450.40 1999.73 1827.76 2434.26

NONTAX REVENUE 467.20 0.00 0.00 0.00 355.00 0.00 0.00 0.00

TOTAL GFGP REVENUE 3727.35 1916.34 1742.70 2312.66 2805.40 1999.73 1827.76 2434.26

ADDENDAPers Income Adjusted 79361.48 80004.55 80752.47 81521.51 82285.44 83114.95 83952.90 84815.24Total Employment 4231.50 4239.75 4252.46 4265.88 4279.67 4292.87 4308.44 4323.71Wage + Salary Income 47805.00 48091.30 48493.10 48971.15 49384.71 49883.17 50363.45 50885.49


State of Michigan GFGP Revenue by Fiscal Years

(Milli f C t D ll NSA)


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Forecast Fiscal Years Percent Changes

2014q3 2014q4 2012 2013 2014 2012-2013 2013-2014

NET PERS INCOME TAX 1872.87 2051.00 6949.50 7774.74 8190.91 11.87 5.35Less: School Aid 532.90 572.17 2115.30 2221.79 2320.78 5.03 4.46

Camp Fund 1.00 0.00 1.00 1.00 1.00 0.00 0.00GFGP INCOME TAX 1338.97 1478.83 4833.10 5551.95 5869.13 14.87 5.71

CONSUMPTION TAXESSales 308.91 300.52 1091.85 1012.66 1153.34 -7.25 13.89Cigarette Excise 47.19 42.85 191.70 185.09 179.11 -3.45 -3.23Beer and Wine 14.45 12.16 51.10 51.22 51.16 0.24 -0.11Liquor Specific 10.35 11.67 41.00 41.61 42.05 1.48 1.06Use 223.64 219.77 781.70 834.86 867.50 6.80 3.91

GFGP CONSUM TAXES 604.55 586.97 2157.35 2125.44 2293.17 -1.48 7.89

BUSINESS TAXESSingle Business 0.00 0.00 -57.30 0.00 0.00 -100.00 NCMichigan Business -613.90 0.00 763.60 -527.40 -613.90 -169.07 16.40Corporate Income 932.40 0.00 525.60 858.90 932.40 63.41 8.56Insur Co Premium 319.20 0.00 300.00 311.40 319.20 3.80 2.50Oil + Gas Severance 13.80 14.59 52.90 53.76 56.79 1.62 5.64Casino 0.00 0.00 0.00 0.00 0.00 NC NC

GFGP BUSINESS TAXES 651.50 14.59 1584.80 696.66 694.49 -56.04 -0.31

PROPERTY TAXESInheritance 0.00 0.00 0.00 0.00 0.00 NC NC

Utility Property 58.80 0.00 58.20 58.55 58.80 0.60 0.43Intangibles 0.00 0.00 0.00 0.00 0.00 NC NCGFGP PROPERTY TAXES 58.80 0.00 58.20 58.55 58.80 0.60 0.43

OTHER GFGP TAXES -7.40 0.00 -17.30 -10.50 -7.40 -39.31 -29.52

TOTAL GFGP TAXES 2646.42 2080.38 8616.15 8422.09 8908.18 -2.25 5.77

NONTAX REVENUE 332.40 0.00 467.20 355.00 332.40 -24.02 -6.37

TOTAL GFGP REVENUE 2978.82 2080.38 9083.35 8777.09 9240.58 -3.37 5.28

ADDENDAPers Income Adjusted 85674.48 86596.00 313235.23 324563.98 337557.56 3.62 4.00Total Employment 4339.77 4355.85 4231.80 4259.44 4316.20 0.65 1.33Wage + Salary Income 51333.94 51837.73 188861.75 194940.27 202466.04 3.22 3.86


State of Michigan SAF and Transportation Tax Revenue by Fiscal Years

(Millions of Current Dollars NSA)


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Actual Forecast

2012q3 2012q4 2013q1 2013q2 2013q3 2013q4 2014q1 2014q2

SAF TAXESSales 1322.10 1315.26 1205.88 1310.72 1366.26 1354.46 1238.34 1347.54Use 98.60 103.11 99.54 107.66 107.11 105.98 103.57 112.38Income 494.50 528.34 521.47 660.16 511.82 549.89 543.00 694.98Mich Business 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Liquor Excise 10.10 11.41 9.00 10.95 10.24 11.53 9.11 11.05Tobacco 101.50 92.11 86.72 94.77 97.51 88.82 83.87 91.81State Education Property 1797.00 0.00 0.00 0.00 1789.73 0.00 0.00 0.00Real Estate Transfer 49.00 37.08 32.18 40.54 48.01 39.01 34.76 45.48Ind and Comm Facilities 40.90 0.00 0.00 0.00 42.00 0.00 0.00 0.00Casino 114.70 0.00 0.00 0.00 106.30 0.00 0.00 0.00Other SAF Taxes 17.10 0.00 0.00 0.00 17.10 0.00 0.00 0.00

TOTAL SAF TAXES 4045.50 2087.32 1954.80 2224.80 4096.08 2149.70 2012.65 2303.25

Lottery Transfer 770.00 0.00 0.00 0.00 744.70 0.00 0.00 0.00

EARMARKED STATESAF REVENUE 4815.50 2087.32 1954.80 2224.80 4840.78 2149.70 2012.65 2303.25

TRANSPORTATION TAXES

Diesel 27.80 27.48 23.40 27.15 29.32 27.82 23.92 27.71Gasoline 210.30 203.34 188.06 206.46 212.05 204.97 189.74 208.42Motor Vehicle Registration 882.60 0.00 0.00 0.00 902.65 0.00 0.00 0.00


State of Michigan SAF and Transportation Tax Revenue by Fiscal Years

(Millions of Current Dollars NSA)


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2014q3 2014q4 2012 2013 2014 2012-2013 2013-2014

SAF TAXESSales 1406.07 1396.84 5074.10 5198.12 5346.40 2.44 2.85Use 111.82 109.88 390.80 417.43 433.75 6.81 3.91Income 532.90 572.17 2115.30 2221.79 2320.78 5.03 4.46Mich Business 0.00 0.00 0.00 0.00 0.00 NC NCLiquor Excise 10.35 11.67 41.00 41.61 42.05 1.48 1.06Tobacco 94.62 85.91 384.40 371.11 359.12 -3.46 -3.23State Education Property 1814.10 0.00 1797.00 1789.73 1814.10 -0.40 1.36Real Estate Transfer 53.95 42.51 142.90 157.81 173.21 10.43 9.76Ind and Comm Facilities 43.50 0.00 40.90 42.00 43.50 2.69 3.57Casino 109.40 0.00 114.70 106.30 109.40 -7.32 2.92Other SAF Taxes 17.10 0.00 17.10 17.10 17.10 -0.00 0.00

TOTAL SAF TAXES 4193.81 2218.99 10118.20 10362.99 10659.40 2.42 2.86

Lottery Transfer 739.00 0.00 770.00 744.70 739.00 -3.29 -0.77

EARMARKED STATESAF REVENUE 4932.81 2218.99 10888.20 11107.69 11398.40 2.02 2.62

TRANSPORTATION TAXES

Diesel 29.98 28.40 105.00 107.35 109.42 2.24 1.93Gasoline 214.13 207.17 814.20 809.90 817.26 -0.53 0.91Motor Vehicle Registration 921.15 0.00 882.60 902.65 921.15 2.27 2.05


Selected State of Michigan Tax Revenues by Fiscal Years



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Actual Forecast

2012q3 2012q4 2013q1 2013q2 2013q3 2013q4 2014q1 2014q2

NET PERS INCOME TAX 1610.00 1872.65 1744.34 2376.25 1781.50 1964.79 1837.69 2515.56Withheld 1894.00 2081.71 1914.93 1863.09 1909.88 2167.87 1991.41 1939.20Quarterly 190.00 86.20 185.66 283.01 197.68 87.75 193.99 296.55Annual 41.60 53.64 90.94 637.35 42.64 54.67 94.99 682.91Less: Refunds 515.60 348.90 447.20 407.20 368.70 345.50 442.70 403.10

Less: School Aid 494.50 528.34 521.47 660.16 511.82 549.89 543.00 694.98Camp Fund 1.00 0.00 0.00 0.00 1.00 0.00 0.00 0.00

GFGP INCOME TAX 1114.50 1344.31 1222.87 1716.09 1268.68 1414.89 1294.69 1820.58

GROSS SALES TAX 1817.50 1808.70 1659.30 1802.40 1878.24 1862.62 1703.98 1853.04Auto Sales 220.70 192.34 202.93 223.50 241.85 208.33 213.40 234.19

Other Sales 1596.80 1616.36 1456.37 1578.90 1636.39 1654.29 1490.58 1618.86Less: Local Dist 180.70 185.78 185.04 170.03 184.38 191.99 190.56 174.62

School Aid 1322.10 1315.26 1205.88 1310.72 1366.26 1354.46 1238.34 1347.54Comp Trans 23.80 21.78 22.54 24.00 25.31 22.92 23.28 24.76Other Trans 0.00 0.00 0.00 0.00 110.00 0.00 0.00 0.00Health Init 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25

GFGP SALES TAX 288.65 283.63 243.59 295.40 190.05 291.00 249.55 303.87

GROSS USE TAX 295.90 309.34 298.63 322.99 321.33 317.94 310.71 337.14Less: School Aid 98.60 103.11 99.54 107.66 107.11 105.98 103.57 112.38

GFGP USE TAX 197.30 206.23 199.09 215.33 214.22 211.96 207.14 224.76

GROSS CIGARETTE TAX 254.40 230.85 217.35 237.51 244.38 222.61 210.20 230.10Less: School Aid 101.50 92.11 86.72 94.77 97.51 88.82 83.87 91.81

Medicaid Trust Fund 85.50 77.57 73.03 79.80 82.11 74.80 70.63 77.31Other Health Prog 16.80 15.24 14.35 15.68 16.13 14.69 13.87 15.19

GFGP CIGARETTE TAX 50.60 45.94 43.25 47.26 48.63 44.30 41.83 45.79

GROSS MICH BUS TAX 763.60 0.00 0.00 0.00 -527.40 0.00 0.00 0.00Less: School Aid 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

GFGP MICH BUS TAX 763.60 0.00 0.00 0.00 -527.40 0.00 0.00 0.00


Selected State of Michigan Tax Revenues by Fiscal Years



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( , )


2014q3 2014q4 2012 2013 2014 2012-2013 2013-2014

NET PERS INCOME TAX 1872.87 2051.00 6949.50 7774.74 8190.91 11.87 5.35Withheld 1987.04 2256.81 7698.10 7769.62 8085.52 0.93 4.07Quarterly 207.04 90.04 702.30 752.54 785.33 7.15 4.36Annual 43.89 56.05 692.20 824.58 876.45 19.12 6.29Less: Refunds 365.10 351.90 2143.10 1572.00 1556.40 -26.65 -0.99

Less: School Aid 532.90 572.17 2115.30 2221.79 2320.78 5.03 4.46Camp Fund 1.00 0.00 1.00 1.00 1.00 0.00 0.00

GFGP INCOME TAX 1338.97 1478.83 4833.10 5551.95 5869.13 14.87 5.71

GROSS SALES TAX 1933.00 1920.89 6977.70 7148.63 7352.65 2.45 2.85Auto Sales 254.48 219.01 836.90 860.63 910.40 2.83 5.78

Other Sales 1678.52 1701.88 6140.80 6288.01 6442.24 2.40 2.45Less: Local Dist 189.56 197.60 710.80 725.23 746.74 2.03 2.97

School Aid 1406.07 1396.84 5074.10 5198.12 5346.40 2.44 2.85Comp Trans 26.21 23.68 92.00 93.63 97.17 1.77 3.78Other Trans 0.00 0.00 0.00 110.00 0.00 NC -100.00Health Init 2.25 2.25 9.00 9.00 9.00 0.00 0.00

GFGP SALES TAX 308.91 300.52 1091.85 1012.66 1153.34 -7.25 13.89

GROSS USE TAX 335.46 329.65 1172.40 1252.30 1301.25 6.81 3.91Less: School Aid 111.82 109.88 390.80 417.43 433.75 6.81 3.91

GFGP USE TAX 223.64 219.77 781.70 834.86 867.50 6.80 3.91

GROSS CIGARETTE TAX 237.14 215.31 963.40 930.10 900.05 -3.46 -3.23Less: School Aid 94.62 85.91 384.40 371.11 359.12 -3.46 -3.23

Medicaid Trust Fund 79.68 72.35 323.70 312.51 302.42 -3.46 -3.23Other Health Prog 15.65 14.21 63.60 61.39 59.40 -3.48 -3.23

GFGP CIGARETTE TAX 47.19 42.85 191.70 185.09 179.11 -3.45 -3.23

GROSS MICH BUS TAX -613.90 0.00 763.60 -527.40 -613.90 -169.07 16.40Less: School Aid 0.00 0.00 0.00 0.00 0.00 NC NC

GFGP MICH BUS TAX -613.90 0.00 763.60 -527.40 -613.90 -169.07 16.40


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Exogenous Variables: 5 of 5 RSQE Forecast 16 November 2012

YPWS YSSTRM YUNB


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YPWS YSSTRM YUNB

2012q3 5721.400 7687.210 75.0002012q4 5775.990 7756.520 66.2002013q1 5848.909 7968.530 62.4792013q2 5925.754 8048.680 62.9572013q3 6006.709 8128.820 63.9282013q4 6089.193 8208.970 64.7392014q1 6172.371 8445.360 65.2392014q2 6257.345 8525.780 65.4572014q3 6348.819 8606.200 65.2272014q4 6440.673 8686.610 64.895


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michigan economic outlook 2013-14

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