Planet Gore

Michigan Stumbles Despite Auto Bailout

Michigan is going backwards. And that’s a problem for President Obama.

Michigan’s unemployment rate jumped to 9 percent in July — nearly a half point higher than June’s 8.6 percent rate — continuing a sudden reversal in the state’s recovery. It was the third straight month during which the jobless rate has risen.

The news comes despite the continued rebound of the Detroit automotive industry (and despite significant fiscal reforms by GOP Governor Rick Snyder) — belying President Obama’s claim that his auto bailout rescued the U.S. economy, and focusing attention on Obama’s regulatory, spending, and tax priorities that are choking national job growth.

“I am skeptical about the claim that because the auto industry was saved, that saved Michigan,” says James Hohman, chief economist for the Mackinac Center, a Michigan think tank. Hohman notes that Michigan’s unemployment number is still lower than last July’s 10.6 percent rate, but Michigan’s stalled recovery mirrors the national economic slowdown in the second quarter.

“There is no decoupling Michigan’s economy from the nation,” says Hohman.

Michigan’s malaise is not the obvious result of say, Obama’s War on Coal, that is literally throwing people out of work in energy states like Ohio and West Virginia. But Michigan businessmen say they are suffering from the same federal policies that are strangling all commerce: The cost of federal regulation, the uncertainty of Obamacare costs to new hires, and the looming tax cliff in January.

Business skittishness at the prospect of second term may explain what Hohman calls Michigan’s “strange, midyear slowdown” as part of a national recovery that is already the worst since WW2.

“Job creation has slowed down but job destruction has not,” adds Hohman of the business cycle. The rise in unemployed workers comes almost entirely from lost jobs — not workers leaving the labor force — reports the state Department of Technology, Management & Budget. In Detroit — a city whose residents voted overwhelmingly for Obama — the situation is much worse, with official unemployment at 19 percent.

Michigan’s plight is significant given Obama’s focus on its core auto industry as a cornerstone of his national economic policy. A key swing state, Michigan’s swoon imperils Obama’s re-election chances.

Henry Payne — Henry Payne is the auto critic for the Detroit News.

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