Michigan had the 6th fastest-growing gross domestic product in the nation last year.
The state’s GDP rose 2.3 percent last year after growing by 4.9 percent in 2010, according to data released Tuesday by the U.S. Bureau of Economic Analysis.
The nation’s overall GDP growth was at 1.5 percent. Six states experienced a drop in GDP last year.
GDP is an inflation-adjusted measure of the states’ output of goods and services, along with investments and net foreign trade.
Last year marked the second consecutive year of strong GDP growth for Michigan; it had the 7th fastest growing GDP in 2010.
But that follows years of declines. Michigan’s GDP of $337.4 billion is still below the 2008 level of $345.6 billion. Its GDP dropped 6 percent in 2008 and 9 percent in 2009. Those figures reflect revisions from the BEA released on Tuesday.
About half of Michigan’s growth last year came from durable-goods manufacturing, which shouldn’t come as a surprise with the fast rebound of the automotive industry.
Durable goods is a procyclical industry — it shrinks faster than the rest of the economy during a recession and grows faster than the rest of the economy during periods of growth, said Alex Rosaen, a consultant with Anderson Economic Group in East Lansing.
“When times are bad and people don’t feel like they have the money to make purchases, durable goods are one of the things they can choose to delay purchase of,” he said. “But you have a lot less ability to make that decision with gas and food or signing a new lease on an apartment.”
Conversely, when times are good people get jobs and raises and decide to replace their old refrigerator or go buy a new car, he said.
Another factor that’s impacting Michigan’s growth right now is the fact that its state and local governments don’t have to make as drastic cuts as other parts of the country, Rosaen said.
That’s because Michigan never really recovered from the recession of the early 2000s so it has been cutting back for a decade, whereas other states grew their local governments in the mid-2000s.
By: Melissa Anders, Mlive