SEMCOG updates its long-range demographic and socio-economic forecast every five years. Preparation and production of the 2050 Forecast are well underway. At SEMCOG’s October General Assembly Meeting, economists from the University of Michigan presented the regional outlook, including a baseline projection and several additional scenarios that prompted important discussions among SEMCOG members and other attendees at the meeting.
Southeast Michigan is recovering well from the COVID-19 pandemic in terms of employment. We expect our region will continue to grow modestly in the next 30 years, with a 9% increase in jobs and a 7% increase in population. Per capita real personal income is expected to grow faster than the U.S. average. The growth will be uneven by industry. Construction, warehousing, wholesale trade, and professional services are among the fastest-growing sectors, whereas retail trade, motor vehicle manufacturing, and agriculture are projected to lose jobs.
Legacy Industries in Flux
The greatest uncertainty and biggest challenge in our future economy could be the automotive industry’s transition from traditional internal combustion engines (ICE) to electric vehicles. EVs require fewer parts, hence fewer jobs, and the industry could be more dispersed to regions outside Michigan. If we significantly lose our share of the auto industry in a fast EV transformation scenario, our total employment could be 216,000 lower than the baseline forecast by 2050. Essentially, we will not have any employment growth for the forecast period.
On the contrary, industrial revolutions tend to create new jobs and bring more opportunities, particularly more knowledge-based and high-paying jobs. Our professional services employment, including engineering, scientific research and development, accounting, advertising, and computer systems design, is projected to grow but not as fast as the national average in the baseline forecast. If this industry can grow as fast as the rest of the nation, we’ll add 76,000 additional jobs by 2050. We must maintain our strength in the auto industry and continuously diversify our economy (Figure below).
Figure: Total Employment Baseline Forecast and Two Additional Scenarios
Population change will significantly influence the trajectory of our economic growth. The labor shortage problem will persist due to low population growth and an aging population. Population natural growth will become negative after 2043, meaning more deaths than births. It is also questionable if migration can return to the pre-pandemic level. Labor force growth, or the lack thereof, will continue to set the speed limit for economic growth.
The purpose of our forecast is two-fold: to understand regional trends and to provide base data for regional and local planning. The next step is determining how regional changes will be reflected in our communities and local economies. We need to know where people will live and work in the future to plan for infrastructure needs such as roads, transit, water, sewer services, etc.
So we need to forecast population, households, jobs, and land use for each community as well as other small areas, such as traffic analysis zones, for planning purposes. The forecast process is not just that we, as staff, run computer models to generate forecast numbers. It’s a collaboration between SEMCOG and communities. Many communities have already provided valuable input into the forecast, such as residential, commercial, and industrial development projects in the pipeline. We are using all the good information we gathered to generate draft local forecasts. We’ll share the draft forecast numbers with communities for further review and revision, before the final detailed forecast is completed and adopted.
We have been adding new information to our forecast page, including a summary data sheet of the 2050 regional forecast and slides of the UM presentation at the General Assembly. We look forward to more opportunities continuously working with communities on this crucial forecast work.
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