Detroit unemployment rate estimated at 7.8% for 2024
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Detroit's unemployment rate is expected to rise from 7.5% last year to 7.8% this year, with complex factors behind the change.
Why it matters: Despite interest rate hikes and a six-week auto industry strike, the city's economic recovery continues, according to a new economic outlook report.
- "The unemployment rate can go up for good reasons and bad reasons," Gabriel Ehrlich, an economic forecaster with U of M, said during Detroit's biannual revenue estimating conference.
- The rate can go up or down based on the size of the number of people employed or looking for work. The report expects 8,400 more people in Detroit's labor force this year than in 2022.
The latest: Ehrlich's team estimates Detroit finished 2023 with 8% unemployment, though it has risen "noticeably" since then, hitting a seasonally adjusted nearly 12% in July.
- For much of the year, the increase has reflected falling employment — a negative — but he said that more recently, in July, the hike reflects a growing labor force.
Between the lines: Last April, Detroit's unemployment rate was reported as falling to a record low of 4.2%, with city officials touting new jobs as the cause. However, that figure has since been revised to a seasonally adjusted 5.9%, per Ehrlich.
- "The unemployment rate in the city does jump around from month to month," he said.
- Like how 4.2% felt to Ehrlich like too-low "statistical noise" in the data that would even out, 12% seems like it's on the other side of the scale, too high, he added.
- "Don't take any one month's number as cause to hit the panic button," he said.
Zoom out: Michigan's unemployment rate in July was 4.4%, while the national rate was 4.3%.
How it works: Detroit's revenue estimating conference occurs twice a year under state law to promote better financial stewardship after the 2013-14 bankruptcy. It also serves to assess the city's revenues. The conference has two parts:
- First, a partnership of universities (U of M, Wayne State and Michigan State) updates the city's overall economic outlook.
- Then, city officials present their analysis of the government's revenue and finances.
The big picture: The conferences were vital tools for understanding the pandemic's effect on the city's coffers.
- They remain essential for understanding Detroit's finances as the city balances its budget and moves toward a more financially stable future while coping with new pension debt payments and the approaching end of its American Rescue Plan Act aid dollars.
- Tracking the city's overall economy and job growth is vital, as Detroit must grow its middle class and alleviate high poverty rates.