Another Look at the Depressed Michigan Economy

In a previous posting I mentioned how the depressed economy in Michigan was making it difficult to sell my home. I posted a graph that showed how the Michigan housing market never benefited from the U.S. housing boom of 2003-2005, yet it is now feeling the pain of the U.S. housing bust. Poor, poor Michigan.

Over the past few days there has been added attention given to the depressed Michigan economy because of the Republican debate that was held there last night. For example, the New York Times reports on "Michigan's economic Woes" and the Arizona Republic reports "Michigan's plight backdrop of GOP debate on economy." Here is an excerpt from the latter article:

"We're an economic basket case, and it's dominating everything here," said Bill Ballenger, editor and publisher of the influential nonpartisan newsletter Inside Michigan Politics. "Our unemployment rate is 7.4 percent, the highest in the country. We've lost 400,000 manufacturing jobs, which is the heart of our economy here in Michigan. We've just never really recovered from the 2001 recession, and that has affected state revenues and has led to a budget crisis here that has been largely averted now, but there are still a lot of problems. Michigan is the worst, probably, in the entire country."

I find it interesting that Bill Ballenger says the Michigan economy never really recovered from the 2001 recession. This lack of recovery is evident in the my housing graph from this previous posting. Following its report on the debate last night, NPR also chimed in on the depressed Michigan economy with this discussion. By far, however, the most interesting piece I saw on the Michigan economy is the video clip below from CNBC. Among other things, it discusses how the foreclosure rate in Michigan is one of the highest in the nation and how home prices in Detroit have fallen 32% over the past year. (Thanks to Brian Arner for helping me make the video clip work.)

CNBC's Diana Olick reports on the Michigan housing market.

Update:

Paul asks about the housing market in Ann Arbor in the comments sections. I turned to the OFHEO housing price index for insight. Here is a figure constructed from the OFHEO index that shows the year-on-year housing price growth rate in current dollar terms.