The new governor of Michigan, Rick Snyder, has put in place a tracking tool called the Michigan Dashboard. It is supposed to be a snapshot of areas the governor has determined vital to the interests of all of the state’s citizens. Here is what it looks like in its most recent release – http://www.michigan.gov/documents/accountability/MichiganScorecard_V6_343176_7.pdf
Three areas immediately jump out at you. The unemployment rate, GDP, and real personal income. The unemployment rate has been steadily decreasing since it exceeded 15% in June of 2009. Currently at 12.4%, this is certainly moving in the right direction. Yet, it is somewhat deceiving due to continuing exodus of citizens from the state. GDP has not experienced any such rebound and continues to decline. The third metric is real personal income and it also continues to decline. Not good news. With food prices skyrocketing again and the price of oil headed north, the stage may be set for a repeat of the 2008 disaster. Foreclosures are still a major issue in Michigan and will continue to be for the foreseeable future.
The news from the automakers has been nothing but positive since the bailouts. Automakers are restoring shifts and expanding production. Everything appears to be rosy. I’m not buying. Of course the numbers are rebounding because of the extreme depths they plunged to. However, I would remain very skeptical as to the long-term prospects of the industry because many hurdles remain for the future. If gas prices at the pump return to $4 or more as predicted, consumers will once again significantly alter their buying and driving habits. The industry recovery may be short-lived if this occurs.
We are now just a few weeks away from the governor putting forth his 2012 budget proposal. The projected shortfall is going to be in the $1.5 to $2 billion range with no federal stimulus funding awaiting for a bailout. He is sure to propose elimination of the Single Business Tax and likely replace it with a flat 6% corporate tax rate. He is also going to release the 2013 budget as well as his plans are for two-year budget cycles.
I suspect he will go the route of New Jersey’s Chris Christie and not pull any punches with the dismal state of affairs. That would certainly be to his benefit. Tell everyone just how bad it really is so the bar is set low. No grandiose claims ala Granholm of being “blown away in five years”. But make no mistake, Snyder is a RINO. He may be heading for the right path fiscally, but he will likely disappoint on other issues. Those will detract from an economic recovery, so the jury is certainly still way out. Unlike the SOTU address from Obama in which we knew what he would say before he said it, we’ll have to wait and see just how specific Snyder gets on his proposals. If he throws in with the camp thinking that the auto industry has recovered and we just need some more “green” diversification of our economy along with a new bridge from Detroit to Windsor, forget it. He needs to go the full New Jersey route and tackle the unions and pension liabilities right out of the gate. We’ll be watching…