In Detroit, Parallels With Obama’s Broader Economy
President Barack Obama jetted Wednesday to an American city whose economic revival mirrors both the U.S. economic comeback under his watch and the often negative perception of it.
Like the ongoing recovery in Detroit and across Michigan, the U.S. economy’s comeback often has been called sluggish and uneven. And like the revival of the Motor City and surrounding areas, economic recovery and healing in the nation has been called too slow.
Speaking Wednesday at the annual auto show in Detroit, Obama declared the American auto industry “all the way back.” He hailed the automobiles that U.S. companies are producing, and said the sector’s comeback has slashed the area’s unemployment rate.
“Folks aren’t writing off Detroit anymore,” Obama declared as a crowd of auto workers cheered. “What’s true of Detroit is true of the country.”
The economic trend lines for Detroit and all of Michigan are not that dissimilar to those of the national economy. After the Great Recession, Detroit was at “rock bottom,” Rep. Brenda Lawrence, D-Mich., said last week after Obama’s address to Congress. “Someone had a headline, ‘Last one out of Detroit turn the lights out.’”
“And now there has been this resurgence, based on, our auto industry is back,” Lawrence said. “Our economy has come back to life.”
But it won’t be back on its feet when Obama leaves the Oval Office next year. “We still have some clouds and some things we need to work on,” Lawrence said.
Just like the broader U.S. economy, as Obama himself pointed out last week during his final State of the Union address.
“For the past seven years, our goal has been a growing economy that works also better for everybody,” he said. “We’ve made progress. But we need to make more.”
Gabriel Ehrlich, an economic researcher at the University of Michigan, said, “There’s a lot of truth to the characterization” that there are parallels between the Detroit and Michigan economies and that of the entire country since the 2008 collapse.
“Nationally, growth has been slower than in historical recoveries,” Ehrlich said Wednesday. “And the impact has been particularly severe here in Michigan.”
Still, the latest economic data on categories such as the unemployment rate and income levels show Detroit and the entire state “has been on a roll in recent years,” Ehrlich said. But inside economic categories such as per capita income and educational attainment, Michigan ranks among the worst. “So, while progress has been made in Michigan, there is still a ways to go,” Ehrlich said.
Just as Obama said last week about the broader national economy.
Economic projections show other parallels, as well. In Detroit and Michigan and across the rest of the country, the construction sector is expected to pick up steam. “We’re expecting the Michigan unemployment rate to run neck and neck with the national rate,” Ehrlich said. “It had been running higher.”
During its worst-performing period on jobs, the national unemployment rate hit 9 percent for the first time in April 2009 and stayed above that mark — approaching 10 percent during several months — until October 2011, when it fell to 8.8 percent, according to Bureau of Labor Statistics data.
Since then, the unemployment rate has steadily declined, falling below 7 percent in November 2013 (6.9 percent) and 6 percent in October 2014 (5.7 percent). A similar escalator-shaped drop has occurred since the worst month of Detroit metro area unemployment, from May 2009 (16. 9 percent) to last month’s preliminary level (6.2 percent), according to the bureau. Notably, the Motor City area’s unemployment trend line features more spikes of unemployment than does the national one.
“When you hear people saying, ‘America is in decline,’ they don’t know what they’re talking about,” Obama said. “They’re peddling fiction in a political year.” He tied the national recovery to Detroit’s economic awakening, saying those presidential candidates who are offering gloomy assessments of the U.S. economy are the same individuals who would have let Detroit “fail.”
He declined to name specific candidates, but Republican presidential front-runner Donald Trump began slamming Obama’s economic record in late 2014. Trump first called it “a disaster” in October of that year, a line he has repeated.
Just last week, Trump kept up his attacks on the president. “You know he’s trying to justify the economy,” he said. “It’s the slowest recovery in our history, and it’s not a recovery.”
Sen. Ted Cruz, R-Texas, who leads Trump in Iowa but is running second to the billionaire businessman nationally, has charged that during Obama’s tenure, “We have seen the lowest labor force participation since the late 1970s.”
“Families, small businesses, minorities and young people are being crushed by rising premiums and fewer good-paying jobs due to Obamacare, vast costs from new agency regulations, and a byzantine tax code,” Cruz said late last year.
The state of the national economy ranks near the top of most Americans’ priority lists in prominent polls. One reason is wage stagnation, according to Sen. Bob Casey, D-Pa., a member of the Joint Economic Committee.
“Part of the problem is the perception over a long period of time is wages haven’t grown over 40 years,” Casey said in a brief interview. “I think that is a reality that, no matter what economic news shows progress, it isn’t always persuasive.”
Still, Obama and national Democratic front-runner Hillary Clinton, his former secretary of State, seem eager to tout the Obama economic record as the campaign cycle begins heating up.
Obama on Wednesday declared the U.S. economy the “strongest, most durable economy in the world,” adding, “We’ve added more jobs than almost all the advanced countries combined.” He repeated a State of the Union theme, saying more work needs to be done to further revive the national and Detroit area economies.
And that’s just what Ehrlich and his University of Michigan colleagues anticipate.
“This has been a slow-and-steady recovery, here and nationally,” he said. “And we expect that to continue.”
Melinda Henneberger contributed to this report.
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