Tuesday, August 28, 2012

Michigan Economy Shifts Into High Gear: Economic Activity Index Rebounds to a Ten-Year High in July

Here's some extremely positive news about the Michigan economy, which would be consistent with recent reports about the rebound in Midwest manufacturing, and especially strong gains in Midwest automotive production:

Comerica Bank’s Michigan Economic Activity Index (a composite index based on 7 individual variables) increased 2.0 points in June, spiking to a level of 105.9. The June index reading is 46 points, or 77%, above the index cyclical low of 59.9 in mid-2009. The index has averaged 102 points over the first half of 2012, 11 points above the index average for all of 2011.

“The Michigan economy pushed further ahead in June, with our Michigan Economic Activity Index up strongly for the second month,” said Robert Dye, Chief Economist at Comerica Bank. “The rate of job creation has slowed over the first two quarters of the year as U.S. auto sales have plateaued around a 14 million unit annual sales rate in 2012. But outside of durable goods manufacturing, we are seeing ongoing gains. Housing markets statewide are improving as sales and prices increase. New home construction remains low, but is expected to increase to meet pent up demand.”

MP: The Michigan Economic Activity Index in July was at its highest level since 2002, ten years ago.  If we're in a recession, or on the edge of one, it sure isn't being reflected in the Michigan economy, which is doing better now than at any time during the last ten years, according to Comerica Bank's Michigan Economic Activity Index.  If we were close to a recession, wouldn't that blue line in the chart above be going down, and not sharply up? 

Related: Michigan statewide home sales in July were almost 14% ahead of last year, and year-to-date sales are 10.4% above last year.  Average home prices in July were 6.55% above a year ago, and year-to-date average prices are 4.83% ahead of last year. 

20 Comments:

At 8/28/2012 3:54 PM, Blogger b s said...

Interesting... what percentage of the US GDP does Michigan cover?

 
At 8/28/2012 3:56 PM, Blogger Mark J. Perry said...

Michigan's is the 13th largest state economy, and represents about 2.5% of U.S. GDP.

 
At 8/28/2012 4:05 PM, Blogger Jon Murphy said...

Good for Michigan, here. These guys have been hurting for quite some time, even before the recession hit. It's good to see them finally getting some breaks.

 
At 8/28/2012 4:21 PM, Blogger Mark J. Perry said...

Jon, I'm sure this really somehow can't be good news for Michigan because we all know we're in a deep depression that will likely last for several centuries or more, and there really isn't ever any positive economic news any more. Ever. At least for the next 200 years or more. We're just totally doomed. The sooner we accept our doomed fate, the sooner we can learn to live a gloomy life of suffering, pessimism and negativity.

The increase in the Michigan index is probably due to: a) car-maker channel stuffing conspiracy, b) BLS lies and mis-calculation of inflation conspiracy, and/or c) some Comerica Bank conspiracy. Or some other conspiracy. A ten-year high for the Michigan index can only be explained by lies and conspiracy. It's just an illusion.

 
At 8/28/2012 4:23 PM, Blogger bart said...

What Jon said, regardless of any excessive optimism or pessimism.

 
At 8/28/2012 4:31 PM, Blogger bart said...

On the other side, aka equal representation, we shouldn't never ever nohow for at least the next 3 millenniums question that everything is anything but perfect about the CPI, or banksters throughout history, or the lack of prosecution and jail time of anyone involved in the curent mess, or that GDP is anything but perfectly calculated forever more, or that there's nuthin' ahead but booms and joy and flowers and puppies and kitties, or that Michigan will grow until it takes over the entire known and unknown universes.

 
At 8/28/2012 4:33 PM, Blogger hancke said...

Good to see MI coming back. Detroit Board or Realtors is reporting an average sale of $20,322 and a YTD average sale of$16,150. WTH?

That piqued my interest on what money would buy, so I went digging through the realty listings. There are many decent to nice houses in Detroit at incredibly low prices. I gather it's not the place to raise family.

This one blew me away.
http://www.trulia.com/property/photos/3091885334-14444-Mansfield-St-Detroit-MI-48227

 
At 8/28/2012 4:41 PM, Blogger Rufus II said...

Boy, just think how good it would be if that dirty old Obama hadn't bailed out the auto industry.

 
At 8/28/2012 4:47 PM, Blogger Mark J. Perry said...

Check this, see what you can get in Flint for $399,000.

 
At 8/28/2012 4:57 PM, Blogger Methinks said...

Mark,

Your best work yet - and that's really saying something.

We just went through our first hurricane scare in FL. We checked in with the Weather Channel occasionally to stay informed and instead of a calm, informative update, were faced with dramatic music leading into reporters in rolled up sleeves reading off a note pad (no time to get it on the teleprompter, see) screeching with the urgency of a soldier responsible for protecting the neighbourhood from a nuclear blast "YOU NEED BATTERIES, GENERATORS, BOTTLED WATER AND AND AN ARK TO RIDE OUT THE 1,000 FOOT TSUNAMI WE'VE FORECAST TO SHRED YOUR HOUSE INTO A PILE OF TOOTHPICKS."

On the day it passed over...well.. by us, it was partly cloudy with wind gusts up to 15 mph. The reporters were inconsolable. Especially since the damn thing didn't even drown a single Republican.

Well, maybe the world will end next time, eh?

 
At 8/28/2012 5:02 PM, Blogger hancke said...

If that house was in Highland Park or University Park (Dallas) you could easily add $4 million to that price. $65/sq foot? Wow. Incredible and a bit sad that the market is that depressed. Buyers market!!

 
At 8/28/2012 5:12 PM, Blogger Che is dead said...

"We’re going to assign you a city -let’s say Detroit- you got to agree to not be arrested and not take any federal, state or city money, and you’ve got to live there for seven years, and if you survive seven years, we’ll make you and your family full citizens." -- Michael Bloomberg

 
At 8/28/2012 6:21 PM, Blogger DiscoveryAlarm.Com said...

Thanks for the GDP figures. You know, it would be interesting to merge all the data of each individual state into one graph. It would be messy, but still, interesting to see how the elastic band that is the US has stretched differently across the country.

 
At 8/28/2012 10:19 PM, Blogger arbitrage789 said...

one indicator pointing to recession:

http://pragcap.com/mcculley-and-rosenberg-this-indicator-could-be-pointing-to-recession

 
At 8/29/2012 11:04 AM, Blogger juandos said...

"The increase in the Michigan index is probably due to: a) car-maker channel stuffing conspiracy"...

Interesting point here Mark and I wonder what percentage of cars manufactured by the so called Big 3 are even made in Michigan anymore considering where all their other plants are located now a days?

"BLS lies and mis-calculation of inflation conspiracy"...

Given the history of BLS 'revisionist hitory' why shouldn't the BLS numbers be taken with a large grain of salt?

 
At 8/29/2012 11:50 AM, Blogger VangelV said...

And let us not forget that GM is back on the road to bankruptcy. It is losing massive amounts of money in Europe and has seen pension obligations explode even as it has to resort to channel stuffing to make the numbers look OK prior to the November election.

 
At 8/29/2012 2:14 PM, Blogger juandos said...

"Boy, just think how good it would be if that dirty old Obama hadn't bailed out the auto industry"...

LMAO!

Hey rufus, if you're clueless enough to believe that nonsense would you be interested in a historical St. Louis city bridge that I'm willing to sell for cheap?

 
At 8/29/2012 11:04 PM, Blogger Unknown said...

Made in Detroit.

GM: August to be Volt's best month with sales topping 2,500

We'll find out the details Monday.

 
At 8/29/2012 11:14 PM, Blogger VangelV said...

Made in Detroit.

GM: August to be Volt's best month with sales topping 2,500

We'll find out the details Monday.


Yet GM idled the Volt line because of poor sales.

 
At 8/30/2012 10:00 PM, Blogger VangelV said...

Let me make this clear. If I were forced to choose I would rather own GM stock than USTs right now because it is possible that GM can change its strategy if Obama loses the election and cancels some of the regulations that will seriously hurt the company. If GM started to make better design decisions and idled some of its lines it could make a profit that would make the stock very cheap. But that is a huge if and right now bankruptcy is still more likely than a huge success over the long term.

 

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