Littmann: 'Unemployment in Michigan will be approaching somewhere between 17 and 20 percent by the end of this year'

Auto industry’s contribution to state’s tax base could drop by more than half, economist says

For Immediate Release
Tuesday, May 12, 2009

Contact: David L. Littmann
Senior Economist
989-631-0900

MIDLAND — In a 12-minute video interview posted on the Mackinac Center for Public Policy’s Web site today, the Center’s senior economist, David L. Littmann, speaks about the impact of the auto crisis on Michigan’s economy and predicts, "Unemployment in Michigan will be approaching somewhere between 17 and 20 percent by the end of this year." Littmann, winner of the prestigious Lawrence R. Klein Award for Blue Chip Forecast Accuracy, has studied Michigan’s economy and the auto industry for nearly four decades.

In the interview, conducted by Mackinac Center Communications Specialist Kathy Hoekstra, Littmann observes, "Revenues for the state will continue to plummet," adding: "The automakers and suppliers were such a big part — I’m going to say between 26 and 30 percent — of the tax base of Michigan. And today that’s eroding to something on the order of perhaps 10 to 12 percent."

Littmann also expresses concern that state officials are underestimating the severity of the economic and fiscal crisis and the need for significant policy change, saying, "They have to explain rationally to the voter and to the taxpayer why they think somehow heaven will change Michigan’s fortunes if bad policies persist." He also offers a clear recommendation: "The single most important element in reform — long-lasting, durable economic and financial reform — for this state, so that we can become a magnet for attraction of business and jobs, is to make it a right-to-work [state]."

The interview, which is 12 minutes and 49 seconds long, is posted at www.mackinac.org/10517.

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