Oakland County’s small businesses and workforce took the brunt of COVID-19’s economic tsunami, but the county’s overall economic diversity and solid fundamentals positions it well for an economic recovery, University of Michigan experts said Sept. 21.
Researchers Dr. Gabriel M. Ehrlich and Donald Grimes told a virtual audience for the 35th annual Economic Outlook Forecast that the number of small businesses open in Oakland County fell by nearly 50 percent from January when the pandemic first appeared to April, but had recovered by August, cutting the downturn in half. Ehrlich predicted the county would recover all but 2 percent of the job losses by the end of 2022.
“We expect a full economic recovery in Oakland County to take multiple years because of the depth of the initial recession,” said Ehrlich, director of the U-M Research Seminar on Quantitative Economics. “Thanks to Oakland County’s strong economic fundamentals, however, we expect it to enjoy a faster recovery than the state of Michigan overall.”
Oakland County Executive David Coulter said the county’s recovery – and the forecast – was based in part on the federal government issuing a second stimulus package to assist states and local governments. The county received $219 million, which has all been allocated to help small businesses, residents, municipalities, school, non-profit organizations and others.
“It is important that Congress extend the CARES Act deadline of the end of the year to allow for full and effective spending of remaining funds” Coulter said. “And, that they approve the next round of federal of assistance targeting individuals, local governments, health and economic stimulus. Our recovery depends on the state and federal governments being full and active partners.”
Oakland County’s workforce was severely affected when unemployment in the county spiked at 19.5 percent in April and 19.3 percent in May. Ehrlich predicted the county’s unemployment rate for 2020 would improve dramatically to 9.1 percent for the year, with the rate nationally at 9.2 percent.
The job losses in the second quarter of 2020 nearly equaled the total lost in the 2000s. In a single quarter, Oakland County lost 156,100 jobs while the nation lost 18.2 million. Until the pandemic hit, the county had 10 consecutive years of job growth since a low point in 2009.
Ehrlich predicted the county would lose 68,000 jobs in 2020 – a decline of 9.1 percent from the previous year – but would recover most of the job losses in the next two years, with 29,100 jobs in 2021 and more than 14,000 in 2022.
During late March and early April, consumer spending fell by more than 40 percent. A rebound coincided with the CARES Act although Ehrlich believes it had less impact in Oakland County than in the state because of the county’s prosperity.
Despite the pandemic’s impact, Ehrlich said Oakland County is well-positioned for an economic recovery because of a combination of the following:
- Oakland County’s educated workforce
- The amount of managerial and professional jobs in the county
- An attractive standard of living and a solid foundation for economic prosperity for the future
“The forecast highlights what we all know,” Coulter said. “With family, friends and neighbors laid-off, businesses shuttered, and community activities paused, Oakland County was hard hit economically by the COVID-19 pandemic. It underscores how important it was for us to be aggressive about the CARES Act money we received. It spotlights how our underlying strengths – economic diversification and well-educated labor force– will help us recover. And reinforces why we will not be complacent about addressing issues regarding educational attainment, childhood poverty and the next generation of economic activity.”
The county maintained its top 10 ranking among counties of similar population, using the following factors:
- Education: the share of the population age 25-64 with at least an associate degree
- Child poverty
- Median income
- High income senior population
- Professional occupations
Ehrlich said any potential recovery would be delayed until a vaccine is developed for the virus, which makes for substantial uncertainty for the county and nation’s economic prospects.
The complete report is found at www.oakgov.com/economicoutlook.