DALLAS, July 1, 2020 /PRNewswire/ -- Comerica Bank's
Michigan Economic Activity Index declined in April to a level of
103.0. April's reading is 5 points, or 5 percent, above the index
cyclical low of 97.9. The index averaged 117.7 points for all of
2019, 0.9 points below the index average for 2018. March's index
reading was 114.5.
Our state economic activity indexes for April are showing the
full impact of the coronavirus pandemic on state economies. The
Michigan economy was hit
particularly hard as auto production ground to a near halt. Eight
out of nine sub-indexes declined in April for Michigan. They were nonfarm employment,
unemployment insurance claims (inverted), housing starts,
industrial electricity demand, light vehicle production, total
state trade, hotel occupancy and state sales tax revenue. The only
gainer for the state was the house price index. We must also note
that house price data for Michigan
has been limited this spring, and so we are making estimates that
may be revised later. Even with the smoothing process that we use
for the monthly sub-indexes, we still see a dramatic decline in the
headline index for Michigan in
April. This points to a dramatic decline in second quarter GDP for
the state. Unfortunately, Michigan, like all other states, is caught in
an adverse feedback loop. As state economic activity declined this
spring, so did tax revenue for the state. This is putting pressure
on state and local government budgets, which is leading to layoffs
and cuts in government services. Michigan has seen a huge increase in
unemployment insurance claims from a pre-crisis level of about
80,000, to nearly 1,000,000 at the end of April. Through early
June, the level of claims dropped to a still very high level of
727,000. We expect the data for May to also look very stressed.
The Michigan Economic Activity Index consists of nine variables,
as follows: nonfarm payroll employment, continuing claims for
unemployment insurance, housing starts, house price index,
industrial electricity sales, auto assemblies, total trade, hotel
occupancy and sales tax revenue. All data are seasonally adjusted.
Nominal values have been converted to constant dollar values. Index
levels are expressed in terms of three-month moving averages.
Comerica Bank, with one of the largest banking center networks
in Michigan, is a subsidiary of
Comerica Incorporated (NYSE: CMA), a financial services company
headquartered in Dallas, Texas,
and strategically aligned by three business segments: The
Commercial Bank, The Retail Bank, and Wealth Management. Comerica
focuses on relationships, and helping people and businesses be
successful. In addition to Michigan and Texas, Comerica Bank locations can be found in
Arizona, California, and Florida, with select businesses operating in
several other states, as well as in Canada and Mexico.
To subscribe to our publications or for questions, contact us at
ComericaEcon@comerica.com. Archives are available at
http://www.comerica.com/insights. Follow us on Twitter:
@Comerica_Econ.
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SOURCE Comerica Bank