Halfway through 2011, Michigan's economy is like a patient who has emerged from intensive care but has yet to leave rehab.
One of every 10 Michiganders is looking for work. A third of all residential real estate sales in the state during the first quarter were foreclosures. And home prices in metro Detroit have dropped to levels last seen in 1994.
Yet plenty of encouraging signs have emerged. Consumer bankruptcy filings, first-time claims for unemployment benefits and mass layoff notices have been dropping. Car and truck factories are humming again. And Detroit's automakers are hiring for the first time in years, helping boost sales and confidence at hundreds of retailers, restaurants and other companies around the state.
"Many businesses we are working with right now appear to have been successful at restructuring their balance sheet," said Gene Lovell, CEO and president of First State Bank of St. Clair Shores, which opened a new loan center in Sterling Heights in April and has been adding employees.
With recent signs of a possible slowdown in the national economy, expect this kind of uneven recovery to persist, several economists said. Charles Ballard, a professor of economics at Michigan State University, warns that the state and the nation won't enjoy a V-shaped rebound like they did after the early-1980s recession.
He sees the recovery taking a U-shaped path, with a long, flat bottom. "Corporations are sitting on trillions. Banks are sitting on trillions," Ballard said. "The money is not moving."
The Great Recession left many scars in Michigan, from foreclosed homes and empty factories to a smaller population and economy.
In the aftermath of the most severe economic downturn in 30 years, the state's economy has not come roaring back to life. Michigan still suffers from high unemployment and too many foreclosed homes. And residents are being pinched by soaring prices for gas and food.
But bit by bit, a gradual recovery is under way, thanks in large part to the improving fortunes of Detroit's automakers. Though plenty of economic uncertainty exists, signs of a turnaround are popping up everywhere, from higher sales at many retailers and restaurants to a flurry of home remodeling projects.
"What's good for GM, Ford and Chrysler is good for everyone," said Wayne State University economist Nitin Paranjpe, who described the revival as slow but steady. "We are seeing all those ripple effects."
"Everybody is breathing easier now," said Laurie Johnson, Auburn Hills' economic development coordinator. "People are starting to spend money again."
New government figures released Tuesday showed that Michigan's economy expanded last year for the first time since 2007. Other data also provides evidence of a state economy on the mend:
-- Michigan's unemployment rate, which stood at 10.2% in April, has been slowly inching down after hitting a peak of 14.1% in August and September 2009.
-- First-time weekly claims for unemployment benefits in Michigan have slid 66% since the start of the year, says the U.S. Department of Labor.
-- First-quarter consumer bankruptcy filings in Michigan fell by 13% from the same period in 2010, according to the American Bankruptcy Institute. The number of businesses filing for bankruptcy remained flat.
-- The Michigan Retail Index has hovered above 50 three of the first four months of this year. Values above 50 generally indicate an increase in overall retail activity.
At many metro Detroit companies, business is picking up. The Michigan Cosmetic Surgery Center in West Bloomfield has seen a 25% jump in demand for cosmetic treatments such as Botox, fillers, liposuctions and eye tucks. Office manager Barbara Klausing said more men are coming in for these enhancements.
At the Whitney restaurant in Detroit's Midtown area, revenues are trending significantly higher than they were at this time last year, said Patrick Liebler, executive director of the fine dining destination.
"It felt good to see more life and more energy lately," Liebler said.
Some businesses are expanding, eager to capitalize on the rebounding economy. A month ago, Brighton-based Wilson Marine opened its fourth store in Harrison Township.
Sales of new and used boats at the 62-year-old, family owned business are holding steady compared with a year ago, said Brad Wilson, the company's business development manager. But a lot more buyers are coming from metro Detroit rather than outside the area, and the retailer is selling more high-end pontoon boats rather than lower-priced ones.
In Sterling Heights, First State Bank of St. Clair Shores launched a new loan center this spring to help boost its lending to small businesses. The bank, which opened in 1917, regained profitability last year after losing money when the recession hit.
Gene Lovell, CEO and president of First State Bank, said that during the last two years, "it was hunker down and do everything you can to survive." But now his bank has been hiring and aims to make more home loans. "This year is going to be a rebuilding year," he said.
Even parts of the economy that remain troubled, such as commercial real estate and homebuilding, have seen some encouraging signs. Regus' four business centers in metro Detroit are full, with more than 500 clients. The Luxembourg-based provider of short-term office space, meeting rooms and business support services for small firms is planning to open two additional centers in the area this year.
"A big part of our growth not only in Detroit but nationwide has been entrepreneurs," said Jeff Doughman, a Regus regional vice president.
In Troy, veteran homebuilder Dan MacLeish Sr. has two potential homebuilding contracts in the pipeline and has been busy with remodeling work. Last year, he didn't build any new homes.
Though it's still tough to get a line of credit from banks for new construction, MacLeish has noticed that some banks have stepped up their lending efforts. And lately, the phones in his office have been ringing with calls from brokers looking for vacant lots. That's a switch from the recent past, when MacLeish was the one making the calls.
Most Popular Stories
- SEO Traffic Lab Celebrate Wins at Digital Marketing Event 'Internet World 2013' in London
- Social Media Initiatives Should Follow Customers' Lead
- Apple CEO: Offshore Units Not a 'Tax Gimmick'
- U.S. Senate Accuses Apple of Large-scale Tax Avoidance
- UTEP Water Recycling Project Wins Venture Titles
- Marketo Makes a Mint in IPO: Stock Shoots Up More than 50 Percent
- Bieber Booed at Billboard Awards
- Crude Oil Up, Gasoline Down
- Austin Startup Compare Metrics Raises $3.5 Million for Expansion
- Why So Many Top 'Car Guys' Are Actually Women