Michigan's Economy Best In Midwest, And It's Not Just Cars

Hillsdale College Professor: Michigan benefiting from move to more certain tax and regulatory environment

Michigan’s economy had the fastest growth in the Midwest in the second quarter of 2016 and ranked in the top 10 nationally, according to the federal Bureau of Economic Analysis. The state’s real gross domestic product was up 2.3 percent, which ranks eighth nationally.

Trailing Michigan in the Great Lakes region, Ohio grew by 1.9 percent, followed by Wisconsin at 1.6 percent. Indiana grew by 1.2 percent, and Illinois increased its GDP by 1 percent.

Gary Wolfram, a professor of economics at Hillsdale College and a member of the board of scholars for the Mackinac Center for Public Policy, attributed Michigan’s growth to further diversification of the state economy.

“Michigan’s economy has become more diversified as the national economy has slowly recovered,” he said. Wolfram also noted that states that rely heavily on oil and gas had the slowest growth in the last quarter since oil prices fell.

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GDP increased in 41 states and the District of Columbia in the second quarter of the year, according to the bureau. Nebraska had the most growth at 4.3 percent, followed by Utah at 3.3 percent. Idaho had a GDP growth of 2.8 percent and Arizona at 2.7 percent. Washington, Kansas, and Florida also had 2.3 percent GDP growth.

Wolfram also said that Michigan’s tax policy and regulatory environment has become more business-friendly.

“Michigan is benefiting from its movement toward a more certain tax and regulatory environment,” he said. “Markets dislike uncertainty with regard to government intervention in the economy, and the rewards of getting rid of the Michigan Business Tax and the consistent election of legislators that understand the importance of letting people act according to their own plan are being felt and will continue to be felt.”

The transportation and warehousing sector was the largest contributor to growth across the country. Real estate industries, health care, and “professional, scientific and technical services,” also did well.

“The auto industry was not the largest driver. But it was broad-based growth,” said James Hohman, assistant director of fiscal policy at the Mackinac Center.


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