Michigan Has Third Largest GDP Growth Since Recession
Only two oil boom states did better
Michigan has achieved another economic milestone on the road to establishing a reputation as the comeback state. From 2009 to 2014, the state experienced the third-highest percentage increase in state gross domestic product (GDP). The state was surpassed by just two states, both with heavy exposure to a national oil drilling boom.
A widely used measure of the size of an economy, GDP is defined as the monetary value of all the finished goods and services produced within a state or nation during a specific period of time.
Michigan’s GDP has expanded 13.8 percent from 2009 to 2014. This far exceeds the growth rate of the nation as a whole, which experienced a modest 5.9 percent increase in GDP, historically low for a period following a deep recession. North Dakota led the nation with a 35.6 percent GDP rise, and Texas was second at 15.5 percent.
“North Dakota and Texas's growth is undoubtedly due to the oil boom that occurred over the recent years,” said Christopher Douglas, an associate professor in economics at the University of Michigan-Flint. “It will be interesting to see how these numbers change now that oil prices have hit $60/barrel.”
Douglas, a member of the Mackinac Center's board of scholars, said he thought that Gov. Rick Snyder’s business tax reforms, the state government not being shut down for four-plus years and the rebound of the auto industry all played a part in the increase in GDP.
University of Michigan economist Don Grimes said the increase was “very impressive for Michigan.” He said he suspected if the increase in GDP associated with mining oil and natural gas was taken out of the equation, the gap between Michigan and North Dakota and Texas would narrow substantially.
There were seven states that had negative GDP growth from 2009 to 2014.
“As the 2000 recession showed, states are not guaranteed a recovery. So it’s nice to see Michigan bounce back from one,” said James Hohman, the assistant director of fiscal policy at the Mackinac Center for Public Policy.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.