GVSU economist: Predicted recession won’t hit like ’08

Michigan

GRAND RAPIDS, Mich. (WOOD) — Michigan has a higher probability of seeing a recession over the next year than any other state, according to a nationwide analysis from LendingTree.

Its latest prediction takes a state-by-state look after a Federal Reserve Bank of New York model puts the national risk of recession at almost 40 percent over the next 12 months. 

LendingTree’s model predicts the likelihood of weak economic fundamentals by looking at the growth rate of each state’s coincident index, as well as growth in areas of home prices, unemployment, tax and personal income.

Michigan’s odds of seeing a recession sits at 58.9 percent, the highest in the nation by nearly 30 points, according to the study.

The study states “…the chance that Michigan will have weak economic fundamentals in the fourth quarter is the highest in the nation. In fact, Michigan’s state coincident index’s growth rate was negative in July (the last month available at the time of this piece’s writing), all but confirming that its economy is on shaky grounds.”

While the forecast looks grim for our state economy, Grand Valley State University economist and Associate Dean for the Seidman College of Business Dr. Paul Isely told News 8 a recession would look nothing like the Great Recession. 

“Right now, we’re trying to guess, ‘Will it be really light, or will we bounce and not quite have a recession?'” Dr. Isely explained. “So, we’re not looking at something like 2008, we’re looking at something maybe a little lighter than what we saw in ’91 or in 2001 and many people didn’t even feel those recessions.”

He said perspective on that is important, but any downturn could come in the next six months to two years, and people should be prepared. 

Dr. Isely predicts the auto industry and other manufacturing jobs will take the hardest hit. You can see more of his interview in the video above. “Many of our industries won’t feel it. The medical industry won’t feel it, our housing industry right here in West Michigan won’t feel it, but there are places, particularly in manufacturing, that are going to have to think through how they’re going to make it through,” Dr. Isely added.

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