A bevy of Michigan economic data released Friday shows a generally depressed environment for the foreseeable future, albeit with some small bright spots.
Michigan economic activity hit a "historical low" this summer, according to an index used by Comerica Inc.
The Dallas-based bank's Michigan Economic Activity Index plunged to 86.6 for the month of June, down slightly from the previous and a large drop from the average level of 117.7 that the index stood at for all of 2019.
Comerica economists Robert Dye and Daniel Sanabria wrote that they hold some hope that data in the coming months will show slight improvement.
"We expect Michigan and other states to show positive overall numbers in July and August reflecting states' relaxation of their social mitigation policies. Even as we see stronger Q3 data for the U.S. and most states, we caution against assuming that this is a V-shaped economic recovery," the economists wrote. "After relaxing some social mitigation policies in late spring, many states experienced an uptick in COVID-19 cases by mid-summer requiring them to tighten policies again. Now with the school year starting, we remain cautious about the potential for increased COVID-19 cases this fall."
The Comerica index looks at nine different sub-indexes.
In June, four of the nine sub-indexes for Michigan were positive: housing starts, house prices, light vehicle production and hotel occupancy. The five negative sub-indexes were nonfarm employment, unemployment insurance claims (inverted), industrial electricity demand, total state trade and state sales tax revenues.
"Despite the huge amount of economic churn that we are seeing, housing markets and auto sales have been stronger than expected, helped by low interest rates," the Comerica economists wrote in the report. "However, shaky consumer confidence is a risk to both consumer sectors."
To that end, the University of Michigan's August Survey of Consumers, released Friday, remained in "depressed" territory for the fifth straight month.
The August figure hit 0.4, an "insignificant" gain from previous months resulting from slightly fewer concerns about the broader economy, UM economist Richard Curtin said.
When, and if, a vaccine comes available for COVID-19 is likely to determine the start of a true economic recovery, Curtin said in a statement.
"Although an effective COVID-19 vaccine may be approved by year-end, when most consumers can expect to be vaccinated is another issue that has thus far received little public attention," he said. "Priority lists are inevitable, and the difference between the first and last position is likely to be at least several months or even longer. A consensus on equitable treatment across the population is unlikely, which could prolong and enlarge discontent, and act to slow the pace of economic growth. While it is not advantageous for presidential campaigns to discuss this issue, it could form the last component of the negative impact of the coronavirus on the economy."
While consumer confidence remains shaky, Michigan shoppers were out and about in July, according to a Friday report from the Lansing-based Michigan Retailers Association, done with the Detroit office of the Chicago branch of the U.S. Federal Reserve Bank.
The organization's July retail index survey came in at 60, a boost from June's survey of 53.5.
"We're happy that several retailers reported being busy after such a dismal spring," Bill Hallan, president and CEO of Michigan Retailers Association, said in a statement. "It's partly due to back-to-school sales, but also, very few cases of COVID-19 have been tied to shopping, so retail has proven that it can operate safely during the pandemic by following established protocols."
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August 29, 2020 at 12:09AM
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Michigan economic activity hits 'historical low' with some bright spots - Crain's Detroit Business
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