Delta variant, microchip shortage to bring Michigan’s economy to a standstill by 2021, according to University of Michigan economists
Michigan’s economy will feel the effects of the coronavirus delta variant and the ongoing shortage of computer microchips that is hampering automobile production for the remainder of 2021 University of Michigan Economists.
An updated economic outlook from the University’s Research Seminar in Quantitative Economics, released today, said the state’s economy “shifted into higher gear” in June and July with 458,000 job creation. This growth followed “three months in which the number of jobs in the state has not increased”.
“Unfortunately, we expect the delta wave of the COVID-19 pandemic to delay some economic growth into next year. The microchip shortage that plagues the state’s auto industry remains a major barrier to Michigan’s economic recovery. A permanent solution to these problems is not yet in sight, ”University of Michigan economists wrote in the updated economic outlook.
On the flip side, Michigan is projected to still see “solid job growth” in 2022 and 2023, restoring 98 percent of the jobs lost in the second quarter of 2020 during the outbreak of the COVID-19 pandemic.
“In these frustrating times, it is important not to lose sight of the fundamental forces that we expect to drive the recovery over the next two years,” wrote the economists. “First, personal incomes have increased over the past two years, which supports consumer demand. Second, the demand for labor is sky-high, with the job opening rate for the Midwest reaching an all-time high in June. Third, macroeconomic policy is much more focused on restoring full employment than it was after the Great Recession. “
Earlier this week, University of Michigan economists released an updated US economic outlook based on the assumption that “there will be a significant wave of COVID-19 infections this fall due to the faster-spreading Delta variant,” although “we don’t.” expect”. a return to widespread government behavioral restrictions. “
“We forecast a moderate slowdown in production and employment growth in the second half of 2021 compared to the pace in the second quarter,” wrote economists in the national outlook.
The national outlook forecasts 5.5 percent of real GDP for the US in the fourth quarter and 5.8 percent for the full year 2021. According to the University of Michigan outlook, real US GDP should reach 3.4 percent in 2022 and 2.4 percent will decrease in 2023.
Economists forecast average core inflation of 3.5 percent in 2021 and 3.4 percent in 2022, before falling to 2.4 percent in 2023.
“In the economy as a whole, it is still difficult to procure many raw materials on time, partly due to transport bottlenecks that are exacerbated by the lack of truck drivers. Many manufacturing and service sectors report labor shortages, rising wages and rising prices. Until the supply chains stabilize, the pressure on producer and consumer prices is likely to continue, ”says the outlook.
U.S. light vehicle production is expected to reach 16.6 million units this year before increasing to 17.3 million units in 2022 and 17.6 million units in 2023.