Economic Outlook

O A K L A N D 31 C O U N T Y , M I C H I G A N st Economic Outlook S U M M A R Y 2016 - 2018 Prepared by: Dr. George A. Fulton and Donald R. Gri...
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O A K L A N D

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C O U N T Y ,

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Economic Outlook S U M M A R Y 2016 - 2018

Prepared by: Dr. George A. Fulton and Donald R. Grimes Institute for Research on Labor, Employment, and the Economy | University of Michigan Final Report Available June 2016 at: AdvantageOakland.com

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SUMMARY INTRODUCTION

L. BROOKS PATTERSON

OA K L A N D CO U N T Y E X E C U T I V E

B

usiness, education and government leaders look to Oakland County and its annual Economic Outlook Summary to provide important data on the economic health and future of the state’s most prosperous county.

B O N D R AT I N G S I N C E 1 9 9 8

Oakland County is a fiscally responsible government partner with resources to support your success.

In the following pages, University of Michigan economists Dr. George A. Fulton and Donald R. Grimes — as they have for 31 years — expertly chart the ebbs and flows of employment in Oakland County. Their three-year projections provide vital information to the region on Oakland County’s economic growth, estimated wages and job availability by industry, and the county’s rank in terms of prosperity when compared with other U.S. counties of similar size. Our business-friendly climate and the innovative programming we’ve worked so hard to institute significantly impacts Oakland County and the state every day. We create opportunities to thrive and prosper. Consider our measureable results from 2015: • • • •

Business expansion, attraction and retention investment of more than $835 million — an increase of $177 million from 2014 More than 10,000 new and retained jobs Direct foreign investment (investment from a company headquartered outside the U.S.) more than doubled from 2015 totals, to $357 million Loans closed of $37.7 million

In simpler terms, more than $2.3 million EACH DAY — on average — was invested here in 2015. Our Emerging Sectors® business development strategy stands at $3.5 billion of total investment since its inception in 2004. Medical Main Street® has topped $1 billion of total investment in seven years. Tech248 — helping companies attract, develop and retain talent — is connecting the county’s 2,000 IT/tech companies while branding us as a global technology hub. I remain grateful to the Oakland County Board of Commissioners for its continued support of our economic development programming and congratulate our economic development team for its hard work. A special word of thanks goes to George Fulton, who informed us that retirement beckons and this is his last report for us. We remain committed to business, education, our entrepreneurs and communities. We appreciate your continued faith in Oakland County.

The Economic Outlook Summary is presented at a luncheon each year by Dr. George A. Fulton and Donald R. Grimes, University of Michigan’s Institute for Research on Labor, Employment, and the Economy. Along with Oakland County, the event is hosted by Chase and Oakland Community College.

2016 SPONSORS Automation Alley | Beaumont Healthcare | Bishop International Airport CAM – Construction Association of Michigan | Huron Valley State Bank | ITC Holdings Kelly Services | Lawrence Technological University | Nexteer Automotive Oakland County Workforce Development | Oakland Schools | Oakland University HOSTS

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Economic Outlook S U M M A R Y 2016 - 2018

P R E PA R E D B Y Dr. George A. Fulton and Donald R. Grimes Institute for Research on Labor, Employment, and the Economy University of Michigan

M AY 2 0 1 6

George Fulton

Donald Grimes

OVERVIEW OF CONTENTS Track Record for Forecasts over the Years Job Growth and Unemployment Rates in Recent History Recent Job Growth by Wage Categories 20 Industries with the Greatest Job Gains Recently Comparisons with Other U.S. Counties of Similar Size Overview of the U.S. Economic Outlook

Outlook for Oakland County through 2018, including: • Employment Growth by Industry Division • Job Growth by Wage Categories • 20 Industries with the Greatest Job Gains • Oakland Employment Growth Compared with Michigan’s • Wage Growth by Industry Group • Local Unemployment and Inflation Rates

The full report will be available in June on the web (updated annually) at:

AdvantageOakland.com | irlee.umich.edu/clmr

Presentation Review

1

Institute for Research on Labor, Employment, and the Economy at the University of Michigan was established in 2008 as a new entity, merging two longstanding university units, the Institute of Labor and Industrial Relations and the Business and Industrial Assistance Division. The Center for Labor Market Research, a division within the Institute, focuses on the transitioning economy and its effects on localities and regions throughout the country. This center has been a pioneer in economic forecasting for regional labor markets, and it has become an integral resource in the area of research-based public policy analysis.

Dr. George A. Fulton

Donald R. Grimes

received his Ph.D. in economics from the University of Michigan. He is a research professor at the University’s Institute for Research on Labor, Employment, and the Economy, where he is director of the Center for Labor Market Research. He is also director of the Research Seminar in Quantitative Economics in the Department of Economics at the University of Michigan. He is a principal adviser to the university administration and to the state government on the economic and fiscal outlook for Michigan.

received his master’s degree in economics from the University of Michigan. He is a senior research area specialist at the University’s Institute for Research on Labor, Employment, and the Economy, where he is assistant director of the Center for Labor Market Research. His primary research interests are in labor economics and economic forecasting.

Dr. Fulton’s special expertise is in economic forecasting and regional economic development. For more than 30 years, he has been forecasting labor market activity for the state of Michigan as a whole and several metropolitan areas within Michigan, as well as for all the state’s counties individually. Twice a year he provides testimony to the state legislature and administration on Michigan’s fiscal and economic prospects, which the state uses as a guide to determining expected future revenues. He currently is a principal and chair of the Detroit Consensus Revenue Estimating Conference. He has directed economic research projects for sponsors such as the Robert Wood Johnson Foundation, the U.S. Department of Commerce, the Michigan Department of Transportation, the Michigan Economic Development Corporation, the Southeast Michigan Council of Governments, and several county governments. His research crosses disciplines, having been published in diverse professional journals and sponsored research reports. He has published one book, A Regional Econometric Forecasting System: Major Economic Areas of Michigan (co-authored with Harold T. Shapiro, former president of both the University of Michigan and Princeton University).

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For more than 30 years, he has been engaged in economic forecasting for state and local governments and is frequently called upon for policy advice. He has worked for many years with the Michigan departments of Transportation and Treasury and the Michigan Economic Development Corporation on policy analysis and evaluating economic strategies. He is co-director of a project to generate long-term economic and demographic projections for all of the counties of Michigan. His past research includes a study looking at Michigan’s industrial structure with a view to identifying sectors that will promote economic growth in the future. He has been involved in research projects sponsored by the U.S. Department of Commerce, the U.S. Department of Labor, the Federal Reserve Bank of Chicago, and the Robert Wood Johnson Foundation. He co-authored a paper, “Change in the Concentration of Employment in Computer Services: Spatial Estimation at the U.S. Metro County Level” (Growth and Change, March 2007). He also co-authored a paper, “Exploring Wage Determination by Education Level: A U.S. Metropolitan Statistical Area Analysis From 2005 to 2012” (Economic Development Quarterly, August 2016).

irlee.umich.edu/clmr

2016–2018 Economic Outlook for Oakland County

Table 1

Report Card: Track Record over the Years Year of % Forecast Error Year of % Forecast Error Year of % Forecast Error Forecast for Total Private Jobs Forecast for Total Private Jobs Forecast for Total Private Jobs 2006 +3.3 1986 +1.4 1996 – 0.5 1987 +0.7 1997 +0.6 2007 0 1988 –1.8 1998 +1.3 2008 +2.2 1989 –1.9 1999 –1.2 2009 +5.5 1990 +2.2 2000 +0.6 2010 –1.6 1991 +3.9 2001 +1.9 2011 – 2.3 2002 +2.5 2012 – 2.2 1992 – 2.0 1993 +0.5 2003 +1.6 2013 – 0.8 1994 –1.3 2004 +2.6 2014 – 0.1 1995 +0.2 2005 +1.4 2015 0 (Positive numbers indicate that the forecast was too high; negative numbers indicate that it was too low.) Average absolute forecast error 1986 – 2015: 1.6% Forecast 2015

Actual 2015

5.3% – 0.6%

4.9% –1.4%

Unemployment rate Consumer inflation rate Forecast date: April 2015



In last year’s report, we forecast that the tempo of job growth in Oakland County would pick up again in 2015 following a brief slowdown in 2014.



That is in actual fact what came to pass. Private-sector job growth did accelerate in 2015, to 2.2 percent. Moreover, we nailed the magnitude of job growth for 2015, matching that 2.2 percent rate in last year’s forecast.



Although it’s not part of the historical track record, we were also spot-on in projecting a tenth of a percentage point decline in government employment for 2015. Thus, with government added to the private sector, we hit the bull’s eye in our forecast of the growth rate for jobs in total, at 2.1 percent.



We forecast job gains in all of the major industry divisions in 2015 save two, and we were correct in that projection with only two exceptions. The information and miscellaneous other services sectors both lost jobs in 2015, contrary to our expectations.



Job gains most exceeded our expectations in financial activities and in leisure and hospitality services. Our largest overshoot was in information.

Presentation Review



Our forecast of the change in the unemployment rate was also dead right: it dropped by 1.9 percentage points, as we had forecast a year ago. The discrepancy in the forecast rate of 5.3 percent and the actual rate of 4.9 percent reported in table 1 is the result of a downward revision of four-tenths of a percentage point in the historical data for 2014 subsequent to last year’s forecast.



We were also precisely on target in our projection of the U.S. CPI, a tenth of a percentage point increase for 2015. We did anticipate the large drop in the local inflation rate, but it was even greater than we expected. The size of the decline in local prices is quite pervasive, and quite puzzling to us, particularly in light of the discrepancy between local and national inflation.



Overall—considering that we found the center of the target on private-sector employment, government employment, total employment, the change in the unemployment rate, and the U.S. inflation rate—last year’s forecast ranks as our most accurate over the thirty years we have been producing the Oakland economic outlook.

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Figure 1

Job Growth in Oakland County, 2006 –15 40,000 30,000 20,000 10,000 0 –10,000 –20,000 –30,000

24,412 24,865 18,146 12,808 14,218 –1,113

– 5,801 –18,494

–20,433

–40,000 –50,000 –60,000 –70,000

– 59,663

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* *Estimate

NOTES



Oakland County endured job losses each year from 2006 to 2009, hitting bottom with a recordsetting decline in 2009 of 59,663 jobs.



This low point was a culmination of the national Great Recession along with bankruptcy proceedings for both General Motors and Chrysler.



By 2011, Oakland turned the corner to return to positive growth for a calendar year, creating 67,423 jobs in the three years from 2011 to 2013—a sizzling pace of 22,500 job additions per year. This was the county economy’s best performance over three years since the mid-1990s.



This red-hot pace was not sustainable, of course, and in 2014 growth tempered to a gain of 12,808 jobs.



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The question then was whether the slowdown in 2014 was foreshadowing a further softening of the county economy moving forward, or instead was simply gravitation to a more sustainable pace of growth. The subsequent performance supports the latter scenario, as growth picked up to add 14,218 jobs in 2015.



The continuing recovery in Oakland is consistent with sustained expansion of the U.S. economy, a local housing sector that continues to recover, and increasing Detroit Three vehicle sales. All of this is backed by the county’s strong economic fundamentals and forward-looking policy initiatives.



The top job producers in the recovery to date among the major industry divisions have been professional and business services; trade, transportation, and utilities; manufacturing; and leisure and hospitality. The two major industry divisions that have lost jobs over the recovery period are government and information.



A primary question is whether the Oakland County economy can sustain its current pace of job growth over the next several years, and if so, what sectors will be the leading contributors to such growth. These questions are addressed in the local forecast section of the report.

2016–2018 Economic Outlook for Oakland County

Table 2

Job Change in Oakland County by Industry Wage Category, 2010 –15

2010

2015

Change 2010 –15

% Change 2010 –15

Total all industries

611,142

705,591

94,449

15.5

High-wage industries ($75,000 or more)

177,205

216,408

39,203

22.1

Middle-wage industries ($35,000 to $74,999)

277,402

310,201

32,799

11.8

Low-wage industries (under $35,000)

156,535

178,982

22,447

14.3

Source: BLS Quarterly Census of Employment and Wages. High-wage industries have an average wage in 2014 about 40 percent above the U.S. average ($51,364), and low-wage industries, about 30 percent below the U.S. average.

NOTES



To better understand what types of jobs are being created in Oakland County over the recovery period to date, we dissected the job recovery into wage categories in order to examine relative performance across these categories.



The ranking of job change from 2010 to 2015, in top-down order measured in percentage terms, is the high-wage (22.1 percent), low-wage (14.3 percent), and middle-wage (11.8 percent) industries.



Specifically, we partitioned the 172 unique industries in our data set into three categories based on their average annual wage in 2014: high-wage industries ($75,000 or more, or about 40 percent above the U.S. average of $51,364); middle-wage industries ($35,000 to $74,999); and low-wage industries (under $35,000, or about 30 percent below the U.S. average).



More than four in ten of the net new jobs created in the county from 2010 to 2015 were in the high-wage industries. The relatively weak performance of the middle-wage category reflects large job losses in state and local government; employment in middle-wage private-sector industries increased by 16.1 percent over this period.



We then computed the change in employment, both in number of jobs and in percentages, over the period from 2010 to 2015 for each of the three wage categories and for the county overall.



In summary, the growth in Oakland over the current economic recovery to date is skewed toward the higher-compensated end of the wage scale, with job growth for high-wage industries well above either of the other two categories.

Presentation Review

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Table 3

Twenty Industries with the Greatest Job Gains in Oakland County, 2010 –15 NOTES



It is instructive to break out, at the most detailed industry level available, the top job producers in Oakland’s recovery to date.



The professional and business services sector contributes seven of the top twenty job providers, and five of the twelve higher-paid providers.



Among the twenty industries with the largest employment gains from 2010 to 2015, twelve of them (60 percent) have wage levels above the average for the county overall, most of them well above. In addition, five of the top seven industries (71 percent) with the largest job gains over the period pay well above average wages.



The strength of the Oakland economy is traditionally concentrated in the area of higher-wage, white-collar professional services, which includes—in addition to engineering services and testing laboratories—management and technical consulting services, headquarters, and computer systems design.



The top twenty job providers, and the higher-wage portion among them, are dominated by industries in professional and business services, and in auto-related manufacturing as well as trade and transportation.



The higher-wage contributors to Oakland’s job growth also include three manufacturing industries (autos, fabricated metals, and machinery); wholesale trade in durable goods; insurance carriers; specialty trade contractors in construction; and motor vehicle and parts dealers.



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The top three industries with the greatest job gains are associated with the auto industry, both its white-collar component (engineering services and testing laboratories) and its manufacturing component. The rebound in the auto industry was a major contributor to Oakland’s recovery between 2010 and 2015.



This is a promising profile for Oakland County moving forward, with the growing presence of the county in the technological evolution of the motor vehicle, and with the county’s continuing focus on professional services that are becoming increasingly integral to the New Economy.

2016–2018 Economic Outlook for Oakland County

Table 3

Twenty Industries with the Greatest Job Gains in Oakland County, 2010 –15 Change 2010 –15

% Change 2010 –15

Average Wage 2014

94,449

15.5

$56,523

Engineering services

8,725

59.3

77,401

Testing laboratories

7,104

54.3

76,974

Transportation equipment manufacturing

5,868

42.1

88,681

Full-service restaurants

4,855

24.1

17,834

Services to buildings and dwellings

4,764

58.1

25,071

Specialty trade contractors

3,989

35.6

62,859

Merchant wholesalers, durable goods

3,946

19.3

92,104

Business support services

3,659

91.9

41,424

Management and technical consulting services

3,598

64.4

73,625

Limited-service restaurants

3,386

23.2

12,933

Fabricated metals manufacturing

3,284

42.4

63,130

Management of companies and enterprises

3,249

30.5

122,946

Computer systems design and related services

2,642

14.6

84,150

Machinery manufacturing

2,402

27.5

78,383

Social assistance

2,318

29.6

22,990

Motor vehicle and parts dealers

2,261

27.2

62,623

Food and beverage stores

2,245

23.0

22,729

Ambulatory health care services

1,845

4.8

53,709

Insurance carriers and related activities

1,753

12.8

80,020

Truck transportation

1,647

82.5

52,869

Total jobs

Presentation Review

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Figure 2

Unemployment Rates for Oakland County and for the United States, 2010 –15 NOTES







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The unemployment rate for Oakland County peaked in 2009 at 13.0 percent. From then through 2015, the jobless rate has shrunk dramatically with the recovery in the local labor market, dropping over 8 percentage points in that interval, to 4.9 percent by 2015.

The unemployment rate recorded for 2015 is the lowest annual reading since 2001.



Oakland’s jobless rate was higher than the U.S. rate during the recovery period to 2014, but the county rate fell below the national rate by fourtenths of a percentage point in 2015.



The last time the county unemployment rate was lower than the U.S. rate was for a twelve-year stretch from 1992 to 2003.

Since 2009, the labor force has declined in only two years. For the other years in the current recovery period, the local labor force has grown, as a greater number of residents seek out expanding job opportunities.

2016–2018 Economic Outlook for Oakland County

Figure 2

Unemployment Rates for Oakland County and for the United States, 2010 –15

14% 12% 10%

Oakland United States

11.8

9.6

9.5 8.9

8%

8.3

8.0

8.1 7.4

6%

6.8 6.2

5.3 4.9

4% 2010

Presentation Review

2011

2012

2013

2014

2015

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Table 4

Oakland County Compared with 37 U.S. Counties of Similar Size NOTES



It’s informative to gauge how Oakland County’s economic foundation is positioned, as this can foreshadow future economic success.



We ranked Oakland and thirty-seven other counties of similar size in the United States on a series of measures that we judge to be indicators of future economic prosperity. The data underlying the rankings are provided in appendix B.



The counties of comparable size to Oakland had populations between 900,000 and 1.6 million in 2015; Oakland’s population was 1.242 million.



Many of these counties are among the most prosperous in the nation—and among the small group of U.S. counties, including Oakland, that have the AAA bond rating with multiple rating agencies.



The measures used in this analysis are: (1) share of the population aged 25 to 64 (prime workingage population) with at least an associate’s degree in 2014; (2) share of the population aged 17 and under who lived within families whose income was below the poverty level in 2014; (3) median family income adjusted for the cost of living in 2014; (4) share of persons aged 65 and older with income at least five times the poverty line in 2014; and (5) share of employed county residents working in professional and managerial occupations in 2014.

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A lower number for the rank indicates a better position for the measure among the thirty-eight counties; i.e., a rank of 1 is best and 38 is worst. Oakland County ranks between 5 and 16 across the five measures.



Oakland is especially noteworthy for its median family income adjusted for the cost of living, where it ranks 5th, and for its share of residents employed in professional and managerial occupations, where it ranks 6th.



The thirty-eight counties are also ordered by a summation of all of the rankings. This is not meant to be a rigorous measure of overall ranking, but it is at least suggestive of relative standing. Oakland ranks 9th overall among the thirty-eight counties on this basis, an impressive standing considering that a number of these counties house some of the healthiest local economies in the nation.



Whether we assess Oakland County with respect to how it is positioned in key economic fundamentals across all regions of the United States, or more restrictively here among many of the elite local economies, it is hard not to see the county thriving as time goes on.

2016–2018 Economic Outlook for Oakland County

Table 4

Oakland County Compared with 37 U.S. Counties of Similar Size* (Ranking based on selected indicators of prosperity) High-Income Associate’s County

Median

Persons

Population

Degree

Child

Family

Aged 65

Managerial,

Sum of

Rank of Sum

State

2015

or More

Poverty

Income**

or Older

Professional

Rankings

Fairfax

VA

1,142,234

1

2

1

1

2

7

1

Montgomery

MD

1,040,116

2

1

4

2

1

10

2

Collin

TX

914,127

5

5

2

9

4

25

3

Middlesex

MA

1,585,139

3

6

3

12

3

27

4

Nassau

NY

1,361,350

11

4

6

3

15

39

5

Bergen

NJ

938,506

9

3

13

5

12

42

6

Westchester

NY

976,396

10

12

11

4

9

46

7

DuPage

IL

933,736

7

8

8

11

13

47

8

Oakland

MI

1,242,304

12

10

5

16

6

49

9

Wake

NC

1,024,198

4

16

9

15

8

52

10

Fairfield

CT

948,053

13

9

10

6

14

52

10

Hennepin

MN

1,223,149

6

18

12

17

7

60

12

St. Louis

MO

1,003,362

14

13

7

18

10

62

13

Contra Costa

CA

1,126,745

18

15

16

8

17

74

14

Fulton

GA

1,010,562

8

28

14

20

5

75

15

Suffolk

NY

1,501,587

22

7

15

10

23

77

16

Travis

TX

1,176,558

17

27

17

13

11

85

17

Mecklenburg

NC

1,034,070

16

20

19

21

18

94

18

Allegheny

PA

1,230,459

15

19

18

29

16

97

19

Prince George's

MD

909,535

32

14

22

7

22

97

19

Honolulu

HI

998,714

21

11

24

14

30

100

21

Franklin

OH

1,251,722

20

26

21

26

19

112

22

Salt Lake

UT

1,107,314

28

17

20

23

26

114

23

Erie

NY

922,578

19

24

23

30

21

117

24

Palm Beach

FL

1,422,789

24

21

27

19

33

124

25

Sacramento

CA

1,501,335

31

25

26

22

24

128

26

Pinellas

FL

949,827

25

22

28

28

25

128

26

Hillsborough

FL

1,349,050

27

23

30

27

27

134

28

Cuyahoga

OH

1,255,921

26

32

25

34

20

137

29

Pima

AZ

1,010,025

30

30

32

24

32

148

30

Orange

FL

1,288,126

23

29

35

33

31

151

31

Milwaukee

WI

957,735

29

33

33

35

28

158

32

Shelby

TN

938,069

35

35

29

25

35

159

33

Duval

FL

913,010

33

31

31

31

34

160

34

Marion

IN

939,020

34

34

34

36

36

174

35

Philadelphia

PA

1,567,442

36

36

37

38

29

176

36

Fresno

CA

974,861

38

37

36

32

37

180

37

Bronx

NY

1,455,444

37

38

38

37

38

188

38

*All counties in the United States with a population between 900,000 and 1,600,000 in 2015. **Adjusted for the cost of living. Source: Compiled by Donald Grimes and George Fulton, University of Michigan, using data from the American Community Survey 2014. Population data are from the Census Bureau population estimates program as of April 2016.

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Figure 3

Growth in U.S. GDP, 2014 –18 NOTES



The future course of the Oakland County economy depends in part on the overall health of the national economy.



The best single measure of the U.S. economy is inflation-adjusted, or real, Gross Domestic Product (GDP): all of the goods, services, and structures produced in the economy.



Growth in real GDP averaged 2.4 percent in 2015, the same as in 2014. In 2015, final sales to domestic purchasers—a broad measure of domestic final demand—grew by 2.8 percent, the fastest pace during this recovery by far. Annual real GDP growth, however, was only the thirdstrongest since 2009, reflecting a drag from the rest of the world on U.S. exports due to weaker economic growth in foreign countries as well as a sharply higher value of the dollar.

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The drag from net exports continues into the earlier parts of 2016, holding down the annual growth rate to 2.3 percent.



The headwinds from net exports are expected to moderate, although remaining sizable, during the rest of 2016 and 2017. Coupled with projected growth of final domestic demand similar to 2015, this pattern implies a slight acceleration in GDP growth in 2017.



Real GDP growth then tapers off a bit in 2018, to 2.5 percent.



Underlying the projection for domestic final demand are solid consumption growth, steady support from residential construction investment, a quick turnaround in business fixed investment, and at last a positive contribution from the federal government sector.

2016–2018 Economic Outlook for Oakland County

Figure 3

Growth in U.S. GDP, 2014 –18

4%

3%

2.8 2.4

2.4

2014

2015

2.5 2.3

2%

1%

0% 2016

2017

2018

RSQE: March 2016

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Figure 4

U.S. Light Vehicle Sales, 1990 – 2018 NOTES



Total sales of U.S. light vehicles—cars, minivans, sport utility vehicles, crossovers, and pickup trucks—were in the range of 16 to 17+ million units sold annually from 1999 to 2007.



Sales then retreated to 10.4 million units by 2009, and have increased every year since then.



The industry crossed the 16-million-unit line in 2014, and then cleared the 17-million-unit line in 2015 at 17.3 million units, finishing approximately on par with 2000, another period of cheap gas and rising truck popularity. This makes 2000 and 2015 so far the strongest years for light vehicle sales on record.



In our forecast, we move upward from there. Pent-up demand continues to be a significant factor in the climb, as the average age of vehicles on the road today is still at record high levels, gasoline prices and interest rates remain low, and the labor market continues to improve.

Figure 5

U.S. Light Vehicle Sales, Total vs. Detroit Three, 2014 –18 NOTES



Total unit sales of U.S. light vehicles rose from 16.4 million units in 2014 to 17.3 million in 2015.



Sales continue to increase in 2016 at a decelerating pace, reaching 17.8 million units, and then inching up to 18 million in 2017 before ticking down to 17.9 million in 2018. The sales forecast for those three years would be the highest annual levels in history.



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The Detroit Three’s share of the light vehicle market shrank from 44.3 percent in 2014 to 43.6 percent in 2015 due to very rapid growth in nonDetroit-Three sales. We are forecasting increases to 44.2 percent in 2016 and 44.5 percent in 2017 and 2018.



The projections for total sales and the Detroit Three’s share of that market, taken together, yield our outlook for Detroit Three sales, which move up progressively from 7.3 million units in 2014 to 7.5 million in 2015 and 7.9 million in 2016, before ticking up by a more modest 100,000 units, to 8 million in 2017 and holding there in 2018.



After growing consistently over the recovery period, Detroit Three sales flatten out from 2016 to 2018.

Light truck sales, including SUVs and CUVs, account for all of the growth in our forecast.

2016–2018 Economic Outlook for Oakland County

Figure 4

U.S. Light Vehicle Sales, 1990 – 2018

g

,

Millions 20 18 17 15

10

5

0

'90

'92 '91

'94 '93

'96 '95

'98 '97

'00 '99

'02 '01

'04 '03

'06

'05

'08

'07

'10

'09

'12

'11

'14

'13

'16

'15

'18

'17

RSQE: March 2016

Figure 5

U.S. Light Vehicle Sales, Total vs. Detroit Three, 2014 –18 Millions of Units

20 18 16 14 12 10 8 6 4 2 0

16.4

7.3

7.9

7.5

8.0

2015

8.0 44.5

44.2

43.6

Total

17.9

44.5

44.3

2014

18.0

17.8

17.3

2016

Detroit Three

2017

2018

Annual % Detroit Three market share

RSQE: March 2016

Presentation Review

15

Figure 6

Job Growth in Oakland County, 2006 –18 NOTES



Oakland County is now in its seventh year of economic recovery since the recession’s low point at the end of 2009. (The annual data indicate a small loss for 2010, but this is an artifact of calculating job changes based on calendar-year averages, which masks the upturn in employment at the beginning of 2010.)



Over the period 2009 to 2015, the county’s job growth (15.2 percent) greatly outpaced both the nation’s (8.0 percent) and the state’s (9.6 percent).



Job growth picked up in 2015 to add 14,218 jobs by our estimate, an increase of 2.1 percent compared with the somewhat slower 1.9 percent rate posted in 2014.



We are forecasting that job growth will tick down to 2.0 percent in 2016 and 2017 before nudging up to 2.1 percent again in 2018. The growth we foresee moving forward translates into gains of 14,006 jobs in 2016, 14,585 in 2017, and 15,562 in 2018.



That growth path generates an increase of 44,153 jobs over the next three calendar years— a healthy pace averaging 2.0 percent per year from 2015 to 2018. The best characterization of Oakland’s economy is that it has achieved a favorable cruising altitude.



If our forecast proves to be correct, the span of Oakland’s current recovery will lengthen to at least nine years. The county’s upward trajectory continues to be supported by its strong economic fundamentals.

Figure 7

Total Jobs in Oakland County vs. Michigan, Seasonally Adjusted, First Quarter of 2000 to Fourth Quarter of 2018 NOTES



To give some perspective to Oakland’s current recovery, we compare it with the preceding decline, to see how much ground has been made up since employment bottomed out in 2009.



We include the same profile for Michigan, with both the county and state employment paths indexed to equal 100 in the second quarter of 2000, representing Michigan’s previous peak employment level.



From the spring of 2000 to the state’s low point in summer 2009, the county lost 163,320 jobs, over half of them occurring in the last two years of the decline, surrounding the interval of the Great Recession.



Then the recovery followed: from the summer of 2009 to the end of the currently published data in summer 2015, Oakland gained 103,887 jobs.



From then to the end of 2018, we are forecasting that the county economy will create an additional 46,798 jobs, thus cumulating to 150,685 job additions from the bottom of the downturn through 2018 (103,887 + 46,798).

16



That would replenish 92 percent, or twelve in thirteen, of the jobs lost from the spring of 2000 to summer 2009, returning the county to the job levels posted in spring 2001, a year into the nineyear decline.



In contrast, the state as a whole is forecast to fall, by the end of 2018, well short of the employment level enjoyed at its peak in the spring of 2000, a job recovery rate of 73 percent compared with Oakland’s 92 percent.



The employment decline was more precipitous in Oakland (a drop of 21.3 index points) than for the state (down 18.3 index points) from the spring of 2000 to summer 2009.



Oakland’s recovery, however, has been more vigorous through the summer of 2015, with the county gaining 13.5 index points compared with 8.8 index points for the state. The gap in the rate of recovery continues to widen in the county’s favor through 2018, with its employment returning by the end of 2018 almost to the peak levels achieved in 2000. 2016–2018 Economic Outlook for Oakland County

Figure 6

Job Growth in Oakland County, 2006 –18 40,000 30,000

24,412 24,865 18,146

20,000 10,000 0 –10,000 –20,000

–1,113

– 5,801 –18,494

15,562 12,808 14,218 14,006 14,585

– 20,433

–30,000 –40,000 –50,000 –60,000

– 59,663

–70,000

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15* ’16

’17 ’18

*Estimate Figure 7

Total Jobs in Oakland County vs. Michigan, Seasonally Adjusted, First Quarter of 2000 to Fourth Quarter of 2018

Index (2000q2 = 100) 101 Forecast 98 95 92 89 86 83

Oakland

80

Michigan

77 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 Presentation Review

17

Table 5

Job Change in Oakland County by Industry Wage Category, 2015 –18

2015

2018

Change 2015 –18

% Change 2015 –18

Total all industries

705,591

749,744

44,153

6.3

High-wage industries ($75,000 or more)

216,408

231,818

15,410

7.1

Middle-wage industries ($35,000 to $74,999)

310,201

327,235

17,034

5.5

Low-wage industries (under $35,000)

178,982

190,691

11,709

6.5

Source: BLS Quarterly Census of Employment and Wages. High-wage industries have an average wage in 2014 about 40 percent above the U.S. average ($51,364), and low-wage industries, about 30 percent below the U.S. average.

NOTES





18

The job change in Oakland from 2015 to 2018 is distributed across industry categories based on the industry average wage, extending the historical data shown in table 2 to include the forecast period. The categories are high-, medium-, and low-wage industries. The method for partitioning the data is outlined in the notes for table 2. The ranking of job change from 2015 to 2018, in top-down order measured in percentage terms, is the high-wage (7.1 percent), low-wage (6.5 percent), and middle-wage (5.5 percent) industries. This matches the rank ordering, by percentage growth, of the 2010–15 period (see table 2).



The high- and middle-wage industries make up almost three-quarters of the net new jobs created in the county over the three-year forecast period.



In summary, the growth in Oakland is forecast to continue to be skewed toward the better-compensated end of the wage scale, as it is in the current recovery period to date, although not quite as tilted toward the higher end as in the earlier period. This growth pattern bodes well for Oakland’s sustained economic prosperity.

2016–2018 Economic Outlook for Oakland County

Table 6

Forecast of Jobs in Oakland County by Major Industry Division, 2016 –18* Average Annual Wage 2014 $56,523 N.A. 51,947

TOTAL JOBS (Number of persons) (Annual percentage change) TOTAL GOVERNMENT

Estimate 2015 705,591 (2.1) 44,516

Forecast Employment Change ’17–’18 ’15 –’18 ’15 –’16 ’16 –’17 14,006 14,585 15,562 44,153 (2.0) (2.0) (2.1) 67 430 443 939

TOTAL PRIVATE

661,076

13,939

14,155

15,120

43,214

56,838

86,010

1,474

1,581

1,493

4,548

71,807

23,868

935

1,052

1,023

3,009

65,922

62,142 11,032 11,128

539 94 22

529 195 79

470 183 87

1,538 473 188

73,955 63,130 78,383

19,796

95

91

53

239

88,681

20,187 575,066

327 12,466

164 12,574

147 13,627

638 38,666

63,183 54,603

125,901 36,136 77,340

2,650 873 1,377

2,281 829 992

2,295 785 1,017

7,226 2,487 3,386

51,147 90,109 31,784

12,425

401

460

493

1,353

59,194

15,168 50,664 35,083 15,580 185,730

2 1,213 775 437 3,796

198 1,103 686 416 4,549

230 1,233 764 469 4,686

430 3,548 2,225 1,323 13,032

75,973 76,766 90,406 46,743 68,345

106,982

3,514

3,414

3,491

10,419

79,122

13,904

310

336

182

828

122,946

64,844

-29

799

1,014

1,784

38,817

108,888 11,160 97,728 65,701 21,504 1,510

1,820 253 1,567 2,603 382 0

2,160 117 2,043 1,911 371 0

2,654 186 2,468 2,092 436 0

6,634 556 6,078 6,607 1,189 0

47,435 44,631 47,753 19,007 32,754 45,079

GOODS-PRODUCING Natural resources, mining, construction Manufacturing Fabricated metal products Machinery Transportation equipment (motor vehicles) Other manufacturing PRIVATE SERVICE-PROVIDING Trade, transportation, and utilities Wholesale trade Retail trade Transportation, warehousing, and utilities Information Financial activities Finance and insurance Real estate and rental and leasing Professional and business services Professional, scientific, and technical Management of companies and enterprises Administrative support and waste management Private education and health services Private education services Health care and social assistance Leisure and hospitality Other services Unclassified

*Some subtotals do not add to totals due to rounding of annual average computations.

Presentation Review

19

Table 6

Forecast of Jobs in Oakland County by Major Industry Division, 2016 –18 NOTES



The projected job movements in total are distributed among twenty-eight major industry divisions in table 6, and into 235 finer industry divisions in appendix A.





20



The government sector is forecast to gain 67 jobs in 2016 following an estimated loss of 40 jobs in 2015. Prior to 2016, employment in the government sector had declined in every year since 2005. Government continues to add jobs at a rate of one percent per year in 2017 (430) and 2018 (443), as the sector adapts to its stringent financial challenges. By the end of our forecast period in 2018, the government sector accounts for only 6.1 percent of the jobs in the county, down from a peak of 8.3 percent in 2009 (when privatesector employment was sharply and temporarily reduced in the recession), and its lowest share since at least 1990.

The aggregate industry category of natural resources, mining, and construction gains 3,009 jobs over the next three years, almost all of them in construction as the very small natural resources and mining components add only a handful of jobs. The construction industry continues to benefit from a revival in residential construction after struggling through a long dry spell. All components of the construction industry enjoy relatively strong job growth over the next three years, with the greatest number of additional jobs (2,082) being created among specialty trade contractors such as plumbing, electrical, and HVAC contractors, as well as residential building contractors (421). Despite these substantial gains, however, the number of construction jobs in 2018 equals only 73 percent of the jobs the county had in that industry in 2000.



Private-sector employment grew in the range of 2.1–2.2 percent in each of 2014 and 2015, and is forecast to continue increasing in that narrow range in each of the next three years. This steady growth translates into job gains of about 14,000 to 15,000 per year, cumulating to private-sector job additions of 43,214 from 2015 to 2018.

Job growth in the manufacturing sector has been slowing, from a gain of 5,756 jobs in 2011 to only 569 in 2015. Manufacturing is forecast to continue to expand, but at a slowing pace, adding 539 jobs in 2016, 529 in 2017, and 470 in 2018. The sector accounts for only 8.5 percent of the jobs in the county by 2018, down from 16 percent in 1990 and 14 percent in 2000.



Leading the early stages of the recovery was transportation equipment (motor vehicle) manufacturing, which added 3,037 jobs in 2011 and 2,290 in 2012. Growth slowed to only 243 job additions by 2015. We see even smaller gains over the next three years—95 jobs in 2016, 91 in 2017, and 53 in 2018.

2016–2018 Economic Outlook for Oakland County

Table 6

Forecast of Jobs in Oakland County by Major Industry Division, 2016 –18 NOTES



By 2018, employment in transportation equipment manufacturing will still be 13.9 percent below 2008 levels, accounting for only 2.7 percent of the jobs in the county, down from 6 percent in 2000. While factory jobs in the auto industry are no longer leading the recovery, its white-collar component will continue to expand at muchabove-average growth rates.



Other components of manufacturing outside of the auto industry have grown more rapidly than autos recently, collectively adding 2,199 jobs in 2013 and 1,713 in 2014 before slowing to add only 326 jobs in 2015. Job growth over the next three years cumulates to 1,299 additions between 2015 and 2018.



The manufacturing industries that see the largest job gains over the forecast period are fabricated metals (473), chemicals (266), and machinery (188). In fact, some manufacturing industries are forecast to be at or near peak employment levels in 2018, including chemicals, machine shops, and metal coating and heat treating.



Wholesale trade sees robust job growth over the next three years, accumulating to a gain of 2,487 jobs, with the industry paying relatively high average wages ($90,109 in 2014). Within this industry division, motor vehicle and parts merchant wholesalers see very strong growth (884 jobs) from 2015 to 2018, averaging 4.9 percent per year. This industry has enjoyed strong growth over the past quarter-century, with employment tripling between 1990 and 2018.

Presentation Review



Retail trade, a much larger and generally lowerpaying sector than wholesale trade, adds 3,386 jobs over the next three years, an average growth rate of 1.4 percent per year. Over one-third of these gains are in motor vehicle and parts dealers, which increases by 1,493 jobs over the forecast period (4.5 percent per year). This industry, unlike most of retail, pays above-average wages ($62,623 in 2014). Other retail industries adding jobs over the forecast horizon include clothing stores (1,088 jobs) and miscellaneous store retailers (775). Food and beverage stores, department stores, and warehouse clubs and supercenters all lose jobs between 2015 and 2018. Technology, especially the Internet, is reducing the number of workers needed for retail transactions.



Transportation services and utilities add 1,353 jobs over the next three years. The relatively strong growth in trucking and other transportation services reflects continued expansion of manufacturing production (even as employment gains slow); a rebound in construction activity; and increased local consumer spending as real wage and job growth pick up.



The information sector adds only 430 jobs over the next three years (0.9 percent per year). Newspaper and book publishers lose 232 jobs between 2015 and 2018, reducing employment in this industry to less than one-half of its peak employment in 2003. More than offsetting these job losses are forecast gains of 318 jobs in the software publishing industry and 204 jobs in the data processing, hosting, and related services industry.

21

Table 6

Forecast of Jobs in Oakland County by Major Industry Division, 2016 –18 NOTES



The finance and insurance industry has been a weak spot in Oakland County, losing jobs between 2010 and 2014, but it finally turned around in 2015, adding 1,613 jobs. Growth continues over the forecast period, albeit at a more subdued pace, adding about 700 jobs a year and cumulating to a gain of 2,225 jobs over the three years (2.1 percent per year). Jobs in the depository credit intermediation industry, such as commercial banking, are forecast to grow at a modest 1.2 percent per year over the next three years. More rapid job growth is expected in securities and investment brokers (3 percent per year) and in insurance agencies and brokerages (3.6 percent per year).



Job growth in professional services over the forecast period is concentrated in testing laboratories (4,473 jobs) and engineering services (2,147). Along with company management, which adds 828 jobs over the next three years, these industries form the core of the white-collar auto industry. By 2018, these three industries will account for 8.7 percent of all employment in Oakland, compared with 7.1 percent in 2000 and only 3.4 percent in 1990—a pattern that is a mirror image of the long-term decline in employment in the blue-collar auto industry.



The real estate and rental and leasing industry sees strong growth over the next three years (1,323 jobs or 2.8 percent per year), as the real estate industry continues to recover. Note that most real estate agents are self-employed and thus are not included in these statistics.



Some other professional service industries that see relatively strong job growth over the forecast horizon are management and technical consulting services (1,207 jobs), computer systems design (1,074), and scientific research and development services (395).



Between 2009 and 2015, employment in professional services exploded by 30,936 jobs (5.9 percent per year). This aggregate industry category is the heart of the knowledge economy, and in Oakland County it is closely identified with the motor vehicle industry. We anticipate that this industry category will continue to grow over the next three years, albeit at a somewhat more subdued pace, cumulating to 10,419 jobs (3.1 percent per year).



Administrative support and waste management services gain 1,784 jobs over the next three years. Business support services (689) and office administrative services (434) see the largest job gains within this sector. Employment services, which includes temporary help services, sees very modest job gains over the next three years (361, or 0.4 percent per year), following substantial job declines in 2013 through 2015.

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2016–2018 Economic Outlook for Oakland County

Table 6

Forecast of Jobs in Oakland County by Major Industry Division, 2016 –18 NOTES



Employment in private education services grew very rapidly in the 1990s and the first decade of the twenty-first century (averaging 4.8 percent per year), but employment growth since 2010 has been weak, averaging 0.6 percent per year. Growth picks up over the next three years as employment increases by 556 jobs, or 1.6 percent per year.



Health care and social assistance adds 6,078 jobs over the forecast period (2 percent per year). This is a substantial increase in the rate of job growth from the interval between 2012 and 2015, when employment increased by only 0.3 percent per year as efforts to reduce health care spending dominated the needs of an aging population for additional medical services. We believe that over the forecast period the needs of the aging baby boomer population will require additional health care workers despite continuing efforts to constrain health care spending. Within this industry division, the largest job gains occur in ambulatory health care services (1,938), hospitals (1,728), social assistance (1,230), and nursing and residential care facilities (1,182).

Presentation Review



The leisure and hospitality services category gains 6,607 jobs (3.2 percent per year) from 2015 to 2018. This is one of the most rapidly growing major industry categories, along with professional and technical services. Its growth reflects both the spending behavior of an aging population and the growing affluence of the local population. Full-service restaurants account for over one-half of those gains (3,460 jobs). Limited-service restaurants (i.e., fast-food restaurants) contribute 1,192 jobs. Over the same period, employment at local hotels and other forms of accommodation grows by 742 jobs and at fitness centers by 311 jobs.



The “other services” sector covers a wide variety of industries: repair services (including auto repair), personal services (such as hair salons and dry cleaners), membership organizations, and private household services. Taken together, these industries grow by 1,189 jobs over the forecast period. The largest gains are in membership organizations (519 jobs) and personal care services (430).

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Table 7

Twenty Industries with the Greatest Job Gains in Oakland County, 2015 –18 NOTES



In comparing the composition of the twenty industries having the largest employment gains between the historical period from 2010 to 2015 (table 3) and the forecast period from 2015 to 2018, we find both continuing and changing patterns.



As in the earlier period, job gains among higherwage industries in the forecast period still dominate, and the counts come close to matching. In the forecast period, eleven of the industries have wage levels above the average for the county overall, compared with twelve in the historical period. In both periods, five of the top seven industries with the largest job gains pay above average wages.



The top five industries for job creation in the forecast period are in the top seven in the historical period: testing laboratories, full-service restaurants, wholesale trade in durable goods, engineering services, and specialty trade contractors.

24



The more advanced stages of the recovery do usher in some differences as well. Perhaps most notable is the absence of any manufacturing industries in the forecast period’s top twenty, compared with three entries in the historical period. This is a typical pattern for manufacturing as a recovery moves into its more mature stages.



Several industries in the professional and business services sector continue to have a prominent presence in the forecast period, including three of the top ten in the job gain rankings, but there is also more diffusion of the recovery into other industries. This includes a greater presence of industries in health care, leisure and hospitality, financial activities, and retail trade in the forecast period’s rankings than in the list for the prior five years.



Oakland County has been investing for years in many of the industries that are becoming increasingly prominent in the New Economy, particularly those associated with professional and business services, health services, and the technological evolution of the motor vehicle.

2016–2018 Economic Outlook for Oakland County

Table 7

Twenty Industries with the Greatest Job Gains in Oakland County, 2015 –18 Change 2015 –18

% Change 2015 –18

Average Wage 2014

44,153

6.3

$56,523

Testing laboratories

4,473

22.2

76,974

Full-service restaurants

3,460

13.9

17,834

Merchant wholesalers, durable goods

2,165

8.9

92,104

Engineering services

2,147

9.2

77,401

Specialty trade contractors

2,082

13.7

62,859

Ambulatory health care services

1,938

4.8

53,709

Hospitals

1,728

5.4

57,738

Motor vehicle and parts dealers

1,493

14.1

62,623

Social assistance

1,230

12.1

22,990

Management and technical consulting services

1,207

13.2

73,625

Limited-service restaurants

1,192

6.6

12,933

Real estate

1,187

9.6

46,488

Nursing and residential care facilities

1,182

7.8

27,324

Clothing and clothing accessory stores

1,088

13.3

19,163

Computer systems design and related services

1,074

5.2

84,150

Insurance carriers and related activities

993

6.4

80,020

Management of companies and enterprises

828

6.0

122,946

Credit intermediation and related activities

817

5.4

81,532

Miscellaneous store retailers

775

17.2

24,083

Accommodation

742

17.7

23,958

Total jobs

Presentation Review

25

Figure 8

Unemployment Rates for Oakland County and for the United States, 2010 –18

13% Forecast

11.8 11% 9.5

9.6 9%

8.9

8.3

8.0

8.1 7% 5%

6.8 7.4 5.3

6.2

Oakland United States

4.7

4.9 4.2

3% 2010

2011

2012

2013

2014

2015

2016

4.5 3.7 2017

4.3 3.3 2018

NOTES



The sustained job growth projected for Oakland County through 2018 is accompanied by an unemployment rate that continues to decline over the forecast period, from 4.9 percent in 2015 to 4.2 percent in 2016, and then further to 3.7 percent in 2017 and 3.3 percent in 2018.



Oakland’s unemployment rate was 2.2 percentage points above the U.S. rate in 2010 (11.8 percent versus 9.6 percent). The gap narrowed to six-tenths of a percentage point in 2014 (6.8 percent versus 6.2 percent).



The drop of 1.6 percentage points over the threeyear period brings the annual jobless rate down into rarified air, lower than it has been since 2000 when the unemployment rate was 2.6 percent, the lowest reading ever recorded in the county.



The county and the nation switched positions in 2015, with Oakland’s jobless rate at 4.9 percent coming in four-tenths of a percentage point below the U.S. rate of 5.3 percent.



The county labor force has grown at a modest pace since 2011, and we are projecting that it will grow at a more rapid pace over the forecast period, as improving job opportunities encourage more people to reenter the labor force in the hope of finding employment. If, instead, the labor force declines, or expands at a slower pace than we anticipate, then the unemployment rate would fall more rapidly with the employment gains we are projecting.



We are forecasting that the gap will continue to widen in the county’s favor, with Oakland’s unemployment rate falling one percentage point below the U.S. rate by 2018 (3.3 percent versus 4.3 percent).

26

2016–2018 Economic Outlook for Oakland County

Figure 9

Inflation Rate, Detroit CPI, 2014 –18

3% 2.4 2.1

2% 1%

1.1 0.7

0% –1%

–1.4 –2%

2014

2015

2016

2017

2018

NOTES



Local inflation is measured here by the growth rate of the Detroit Consumer Price Index (CPI). Consumer price data are compiled at the regional level; they are not available for the county in isolation.



Going forward, local inflation is forecast to move up to 0.7 percent in 2016 and then to pick up further to 2.1 percent in 2017 and 2.4 percent in 2018, as energy prices rise slowly.



Local prices increased modestly by 1.1 percent for 2014, before plummeting by 1.4 percent in 2015, a marked departure from a tenth of a percentage point increase in the U.S. CPI for that year.



In 2017 and 2018, local inflation runs, more or less, with the national rate.



The plunge in the local index reflects the sharp drop in energy prices that began in late 2014, coupled with—unlike the U.S. measure—little or no increase in core prices (that is, excluding food and energy). The weaker local price movements are pervasive and quite puzzling, and we have judged this broadly based drop to be temporary.

Presentation Review

27

Figure 10

Average Real Wage in Oakland County by Selected Industry Group, 1990 –2018 NOTES





The average real wage (in 2014 dollars) in Oakland County between 1990 and 2018 is presented here, both in total and for three broad industry categories: (1) traditional blue-collar industries such as manufacturing, construction, mining, and transportation; (2) service-providing industries that tend to employ workers with higher educational attainment, such as government, health services, professional services and corporate headquarters, wholesale trade, financial activities, and information; and (3) lower-educationalattainment service-providing industries such as retail trade, leisure and hospitality, business services such as temporary help, and repair and personal services.



The decline of 1.4 percent in local prices in 2015 converted a nominal wage gain of 2.6 percent into a real wage increase of 4 percent. This was the largest year-over-year increase in the county’s real wage since at least 1990, raising the real wage above its prior peak level in 1999.



A modest, but positive, increase in local prices in 2016 converts a nominal wage increase of 2.8 percent into a real increase of 2.1 percent. With an acceleration in inflation expected in 2017 and 2018, the growth in real wages moderates to rates of 1.1 percent and 1.0 percent, respectively.

The average inflation-adjusted wage in Oakland peaked in 1999 at $58,220, a 19.8 percent gain from 1990. Wage gains were widespread across almost all industries, with increases over those nine years of 14.7 percent in the blue-collar industries, 22.3 percent in the higher-education service industries, and 16.5 percent in the lowereducation service industries.



According to our forecast, the real wage will have increased for five consecutive years between 2013 and 2018, increasing by a solid 10.7 percent over that interval.



The real wage gains in the 2013–18 interval are distributed across all classes of workers. The greatest gains, however, accrue to the highereducational-attainment service industries (a cumulative wage increase of 11.2 percent between 2013 and 2018). The smallest gains fall to the lower-educational-attainment service industries (an increase of 7.5 percent between 2013 and 2018). Blue-collar industry wages are forecast to see a gain of 10.7 percent over that period.



Over the period 1999 to 2013, the average real wage in Oakland tended to decline, reaching a low of $55,350 in 2013, 4.9 percent below its peak level in 1999. The average wage in the blue-collar industries declined a little more than in the other industry categories, but almost all industries saw some decline.



The real wage overall grew by 2.1 percent in 2014, the blue-collar industries leading the way with a gain of 3 percent. This was largely due to strong wage growth in construction and some of the non-motor-vehicle manufacturing industries, as labor shortages in some of the skilled trades caused firms to increase pay and hours worked. The real wage increased by 2.2 percent in the higher-education service category, but by only 0.5 percent in the lower-education service group.

28

2016–2018 Economic Outlook for Oakland County

Figure 10

Average Real Wage in Oakland County by Selected Industry Group, 1990 –2018

Blue-collar industries Higher-education service industries Lower-education service industries Total

$80,000 $75,000 $70,000 $65,000 $60,000 $55,000 $50,000 $45,000 $40,000 $35,000 $30,000 $25,000

Forecast

’90 ’92 ’94 ’96 ’98 ’00 ’02 ’04 ’06 ’08 ’10 ’12 ’14 ’16 ’18 ’91 ’93 ’95 ’97 ’99 ’01 ’03 ’05 ’07 ’09 ’11 ’13 ’15 ’17

Presentation Review

29

Appendix A

Forecast of Jobs in Oakland County by Detailed Industry Division

TOTAL PAYROLL JOBS (Number of persons) (Annual percentage change) TOTAL GOVERNMENT Federal government Postal Service Federal government NEC State and local government Local libraries Local education and health services Elementary and secondary schools Other education and health services Local public administration State and other local government TOTAL PRIVATE GOODS-PRODUCING Natural resources and mining Agriculture, forestry, fishing, and hunting Mining, quarrying, and oil and gas extraction Construction Construction of buildings Residential Nonresidential Heavy and civil engineering construction Utility systems Land subdivision Highway, street, and bridge construction Other heavy construction Specialty trade contractors Building foundation and exterior Building equipment Building finishing Other specialty trade contractors Manufacturing Food Bakeries and tortilla manufacturing Food manufacturing NEC Textile products Wood products Paper products Printing and related support activities Chemicals Plastics and rubber products Nonmetallic mineral products Primary metals Fabricated metals Forging and stamping Architectural and structural metals Machine shops and threaded products Coating, engraving, and heat treating metals Other fabricated metals Fabricated metals NEC

30

Average Annual Wage 2014

Estimate 2015

2016

Forecast 2017

2018

705,591 (2.1) 44,516 4,694 3,623 1,071 39,822 541 22,285 20,304 1,981 12,519 4,476

719,597 (2.0) 44,582 4,725 3,676 1,049 39,857 560 22,220 20,411 1,809 12,567 4,510

734,182 (2.0) 45,012 4,762 3,725 1,037 40,250 575 22,380 20,576 1,804 12,752 4,543

749,744 (2.1) 45,455 4,804 3,774 1,029 40,651 593 22,500 20,699 1,801 12,971 4,587

$56,523 N.A 51,947 68,488 63,265 85,977 50,054 20,622 51,603 52,775 40,735 47,074 53,793

661,076 86,010 689 547 142 23,178 5,990 3,096 2,894 1,997 903 197 840 57 15,191 2,305 8,680 2,390 1,816 62,142 1,118 583 535 164 131 265 1,925 3,039 3,290 1,220 1,299 11,032 1,018 784 4,017 2,056 1,548 1,608

675,015 87,484 696 554 142 24,106 6,177 3,196 2,981 2,069 912 211 880 66 15,860 2,453 9,002 2,481 1,925 62,681 1,160 624 536 170 130 280 1,941 3,114 3,351 1,228 1,203 11,126 1,031 797 4,104 2,060 1,509 1,625

689,170 89,065 696 551 145 25,158 6,425 3,353 3,073 2,144 916 247 908 73 16,589 2,589 9,357 2,592 2,051 63,210 1,190 651 540 177 127 286 1,934 3,208 3,404 1,236 1,159 11,322 1,061 802 4,226 2,081 1,507 1,644

704,289 90,557 702 554 148 26,175 6,665 3,518 3,147 2,237 933 294 932 78 17,273 2,716 9,690 2,699 2,168 63,680 1,224 678 545 184 125 290 1,927 3,304 3,439 1,238 1,124 11,505 1,089 807 4,341 2,098 1,508 1,662

56,838 71,807 31,836 24,831 58,872 66,943 74,721 77,042 72,200 73,363 61,673 76,873 85,001 63,621 62,859 51,918 69,867 48,615 61,229 73,955 28,361 20,215 35,630 27,592 53,900 76,437 55,318 87,493 49,793 56,172 98,629 63,130 56,515 54,963 73,966 50,308 62,289 58,751

2016–2018 Economic Outlook for Oakland County

Appendix A continued

Forecast of Jobs in Oakland County by Detailed Industry Division Average Annual Wage 2014

Estimate 2015

2016

Forecast 2017

2018

Machinery Industrial machinery Commercial and service industry machinery Metalworking machinery Turbine and power transmission equipment Other general purpose machinery Machinery NEC Computer and electronic products Semiconductors and electronic components Electronic instruments Computer and electronic products NEC Electrical equipment, appliances, components Transportation equipment Motor vehicle bodies and trailers Aerospace products and parts Transportation equipment NEC Furniture and related products Miscellaneous manufacturing Medical equipment and supplies Other miscellaneous manufacturing Manufacturing NEC

11,128 763 569 5,547 536 3,378 335 2,514 1,419 775 320 1,106 19,796 1,101 1,028 17,666 448 2,709 725 1,984 959

11,150 731 604 5,479 514 3,493 329 2,559 1,452 769 339 1,103 19,891 1,223 1,011 17,657 455 2,780 728 2,052 1,040

11,229 725 610 5,506 505 3,552 331 2,547 1,437 757 353 1,094 19,982 1,320 997 17,665 453 2,798 746 2,052 1,063

11,316 719 616 5,537 496 3,615 333 2,535 1,421 746 367 1,083 20,035 1,403 983 17,649 448 2,817 766 2,051 1,088

$78,383 76,835 59,921 76,632 83,365 85,162 61,341 70,831 65,215 72,436 90,603 65,944 88,681 108,173 79,065 88,249 48,003 56,074 59,690 54,164 48,787

PRIVATE SERVICE-PROVIDING Trade, transportation, and utilities Wholesale trade Merchant wholesalers, durable goods Motor vehicles and parts Commercial equipment Office equipment Computers and software Medical equipment Commercial equipment NEC Electric goods Machinery and supply Industrial machinery Machinery and supply NEC Merchant wholesalers, durable goods NEC Merchant wholesalers, nondurable goods Paper and paper products Druggists’ goods Groceries and related products Chemicals Miscellaneous nondurable goods Merchant wholesalers, nondurable goods NEC Wholesale electronic markets, agents, brokers Retail trade Motor vehicle and parts dealers Furniture and home furnishings stores Electronics and appliance stores Building material and garden supply dealers Food and beverage stores Health and personal care stores

575,066 125,901 36,136 24,425 5,700 5,492 956 2,456 1,449 631 4,184 4,796 3,303 1,494 4,253 6,853 386 1,734 1,382 1,389 1,132 831 4,859 77,340 10,564 2,670 4,556 6,487 12,026 5,641

587,531 128,552 37,009 25,175 6,029 5,525 923 2,455 1,491 655 4,277 4,984 3,423 1,561 4,359 6,969 383 1,738 1,409 1,374 1,223 842 4,864 78,717 11,145 2,716 4,578 6,589 11,970 5,703

600,105 130,833 37,838 25,897 6,323 5,615 897 2,499 1,555 663 4,343 5,139 3,540 1,599 4,478 7,091 379 1,773 1,438 1,379 1,272 849 4,849 79,709 11,591 2,734 4,604 6,645 11,899 5,736

613,732 133,128 38,623 26,590 6,584 5,720 874 2,545 1,630 672 4,414 5,282 3,650 1,632 4,590 7,199 374 1,809 1,466 1,394 1,300 855 4,834 80,726 12,057 2,745 4,637 6,716 11,893 5,774

54,603 51,147 90,109 92,104 90,090 110,027 69,639 145,529 86,920 71,330 103,824 81,562 81,401 81,880 71,589 73,468 72,075 67,431 60,691 107,544 61,138 67,768 104,688 31,784 62,623 33,576 47,241 37,991 22,729 36,094

Presentation Review

31

Appendix A continued

Forecast of Jobs in Oakland County by Detailed Industry Division

Retail trade (continued) Gasoline stations Clothing and clothing accessories stores Sporting goods, hobby, book, and music stores General merchandise stores Department stores, except discount Discount department stores Warehouse clubs and supercenters All other general merchandise stores Miscellaneous store retailers Nonstore retailers Transportation and warehousing Truck transportation Couriers and messengers Warehousing and storage Transportation and warehousing NEC Utilities Information Publishing (except Internet) Newspaper, book, and directory publishers Software publishers Motion pictures and sound recording Motion picture and video production Motion picture and video exhibition Motion pictures and sound recording NEC Broadcasting (except Internet) Telecommunications Wireless telecommunications carriers Telecommunications NEC Data processing, hosting, and related services Information NEC Financial activities Finance and insurance Credit intermediation and related activities Depository credit intermediation Commercial banking Depository credit intermediation NEC Nondepository credit intermediation Real estate credit intermediation Nondepository credit intermediation NEC Activities related to credit intermediation Mortgage and nonmortgage loan brokers Activities related to credit intermediation NEC Securities, commodity contracts, investments Insurance carriers and related activities Insurance carriers Direct property and casualty insurers Insurance carriers NEC Insurance agencies, brokerages, and related Insurance agencies and brokerages Other insurance-related activities Finance and insurance NEC

32

Estimate 2015

2016

Forecast 2017

2018

2,095 8,167 4,078 15,479 4,083 4,231 5,917 1,248 4,496 1,081 11,026 3,645 1,873 1,375 4,132 1,400 15,168 3,853 1,599 2,254 2,079 594 1,278 207 1,449 5,227 571 4,656 2,004 556 50,664 35,083 15,135 9,183 6,421 2,762 4,713 1,928 2,784 1,240 395 845 4,438 15,449 8,187 2,362 5,825 7,262 5,146 2,116 61

2,082 8,604 4,152 15,205 3,985 4,114 5,806 1,301 4,889 1,084 11,400 3,796 1,878 1,379 4,347 1,426 15,170 3,816 1,497 2,319 2,082 616 1,273 192 1,475 5,135 568 4,567 2,074 588 51,876 35,859 15,494 9,320 6,537 2,783 4,896 2,077 2,819 1,278 428 851 4,540 15,760 8,313 2,335 5,977 7,447 5,352 2,095 65

2,099 8,940 4,201 15,044 3,961 4,028 5,715 1,340 5,129 1,086 11,844 3,982 1,881 1,362 4,619 1,442 15,368 3,877 1,431 2,446 2,107 623 1,279 205 1,503 5,114 542 4,572 2,140 627 52,979 36,545 15,724 9,425 6,658 2,766 4,996 2,171 2,825 1,303 461 843 4,683 16,074 8,442 2,320 6,122 7,633 5,536 2,096 64

2,118 9,254 4,258 14,915 3,943 3,953 5,638 1,381 5,271 1,087 12,320 4,171 1,892 1,352 4,905 1,458 15,599 3,939 1,367 2,572 2,138 631 1,290 217 1,531 5,109 515 4,593 2,207 674 54,212 37,309 15,952 9,528 6,782 2,746 5,091 2,257 2,834 1,333 496 837 4,851 16,442 8,606 2,307 6,300 7,836 5,727 2,109 64

Average Annual Wage 2014 $17,319 19,163 22,472 22,680 24,585 18,628 25,474 15,946 24,083 51,437 47,187 52,869 48,935 57,153 38,082 148,076 75,973 88,422 70,445 103,520 45,293 84,100 10,798 98,822 93,019 75,803 87,182 73,778 77,223 74,134 76,766 90,406 81,532 76,717 82,313 61,464 94,809 72,022 108,597 65,209 66,617 64,528 154,933 80,020 86,006 90,087 84,661 73,586 75,484 69,205 106,602

2016–2018 Economic Outlook for Oakland County

Appendix A continued

Forecast of Jobs in Oakland County by Detailed Industry Division Estimate 2015 Real estate and rental and leasing Real estate Lessors of real estate Offices of real estate agents and brokers Activities related to real estate Rental and leasing services Lessors of nonfinancial intangible assets Professional and business services Professional and technical services Legal services Accounting and bookkeeping services Architectural and engineering services Architectural services Engineering services Testing laboratories Engineering services NEC Specialized design services Computer systems design and related services Management and technical consulting services Scientific research and development services Advertising, PR, and related services Other professional and technical services Management of companies and enterprises Administrative support and waste management Administrative and support services Office administrative services Employment services Business support services Investigation and security services Services to buildings and dwellings Other support services Administrative and support services NEC Waste management and remediation services Private education and health services Education services Elementary and secondary schools Colleges and universities Education services NEC Health care and social assistance Ambulatory health care Offices of physicians Offices of dentists Offices of other health practitioners Outpatient care centers Medical and diagnostic laboratories Home health care services Other ambulatory health care services Hospitals Nursing and residential care facilities Nursing care facilities Residential mental health facilities

Presentation Review

15,580 12,363 5,524 1,480 5,358 2,903 314 185,730 106,982 11,727 6,379 45,416 1,287 23,426 20,187 515 2,141 20,758 9,182 1,962 4,489 4,930 13,904 64,844 63,440 3,946 29,682 7,640 5,562 12,962 2,276 1,371 1,404 108,888 11,160 3,981 2,268 4,910 97,728 40,227 14,300 6,225 5,113 2,562 1,611 9,098 1,318 32,287 15,068 4,730 2,765

2016 16,018 12,782 5,628 1,523 5,631 2,923 313 189,526 110,497 11,841 6,488 47,593 1,315 24,148 21,586 545 2,249 21,065 9,609 2,110 4,463 5,078 14,214 64,815 63,453 4,028 29,594 7,896 5,707 12,610 2,260 1,357 1,362 110,708 11,413 4,045 2,317 5,051 99,296 40,726 14,259 6,297 5,269 2,676 1,631 9,245 1,350 32,798 15,376 4,922 2,812

Forecast 2017 16,434 13,140 5,712 1,574 5,854 2,971 324 194,075 113,911 11,877 6,573 49,851 1,352 24,867 23,074 558 2,358 21,465 10,011 2,234 4,446 5,095 14,550 65,614 64,262 4,186 29,774 8,114 5,862 12,690 2,244 1,391 1,352 112,868 11,530 4,077 2,360 5,093 101,339 41,382 14,372 6,409 5,414 2,766 1,662 9,378 1,381 33,313 15,794 5,169 2,891

2018 16,903 13,550 5,797 1,649 6,103 3,019 335 198,762 117,402 11,915 6,662 52,198 1,395 25,573 24,660 570 2,498 21,832 10,389 2,357 4,427 5,123 14,732 66,628 65,275 4,380 30,044 8,329 6,005 12,859 2,230 1,429 1,353 115,522 11,716 4,154 2,421 5,141 103,806 42,164 14,552 6,549 5,571 2,869 1,697 9,516 1,411 34,015 16,249 5,432 2,975

Average Annual Wage 2014 $46,743 46,488 42,038 50,367 50,152 43,782 82,690 68,345 79,122 86,694 63,282 77,175 79,976 77,401 76,974 65,919 94,456 84,150 73,625 140,406 86,391 56,080 122,946 38,817 38,485 54,764 41,760 41,424 27,185 25,071 50,083 43,428 54,591 47,435 44,631 38,457 39,538 51,834 47,753 53,709 76,451 47,825 42,869 51,341 45,349 31,272 40,249 57,738 27,324 34,115 24,604

33

Appendix A continued

Forecast of Jobs in Oakland County by Detailed Industry Division

Nursing and residential care facilities (continued) Community care facilities for the elderly Other residential care facilities Social assistance Individual and family services Child day care services Social assistance NEC Leisure and hospitality Arts, entertainment, and recreation Spectator sports Golf courses and country clubs Fitness and recreational sports centers Arts, entertainment, and recreation NEC Accommodation and food services Accommodation Food services and drinking places Restaurants and other eating places Full-service restaurants Limited-service restaurants Cafeterias, grill buffets, and buffets Snack and nonalcoholic beverage bars Special food services Drinking places, alcoholic beverages Other services Repair and maintenance Automotive repair and maintenance Repair and maintenance NEC Personal and laundry services Personal care services Personal and laundry services NEC Membership associations and organizations Private households Private unclassified service-providing Addendum Unemployment rate

34

Average Annual Wage 2014

Estimate 2015

2016

Forecast 2017

2018

6,048 1,525 10,147 5,392 3,681 1,075 65,701 9,868 1,416 2,325 4,030 2,097 55,833 4,186 51,646 45,868 24,969 17,986 521 2,392 4,017 1,761 21,504 6,012 4,284 1,728 8,621 4,782 3,839 5,754 1,116 1,510

6,113 1,528 10,397 5,617 3,726 1,053 68,304 10,108 1,518 2,361 4,119 2,109 58,196 4,436 53,760 47,893 26,240 18,627 519 2,507 4,048 1,819 21,885 6,057 4,263 1,794 8,847 4,960 3,887 5,893 1,088 1,510

6,187 1,548 10,849 6,035 3,741 1,072 70,215 10,304 1,570 2,399 4,219 2,117 59,911 4,680 55,230 49,261 27,271 18,884 511 2,594 4,092 1,878 22,257 6,124 4,287 1,837 8,973 5,073 3,899 6,075 1,085 1,510

6,252 1,590 11,378 6,538 3,746 1,094 72,307 10,520 1,603 2,441 4,341 2,136 61,788 4,928 56,860 50,804 28,430 19,178 509 2,688 4,127 1,928 22,693 6,196 4,318 1,878 9,139 5,211 3,928 6,273 1,085 1,510

$24,968 22,497 22,990 23,243 19,886 30,241 19,007 32,387 96,805 26,237 17,277 32,277 16,682 23,958 16,102 15,803 17,834 12,933 19,508 15,731 19,392 15,931 32,754 42,553 39,778 49,383 24,305 21,443 28,158 37,893 20,048 45,079

4.9

4.2

3.7

3.3

N.A.

2016–2018 Economic Outlook for Oakland County

Appendix B

Oakland County Compared with 37 U.S. Counties of Similar Size* Indicator Values High-Income Associate’s

Median

Persons

Population

Degree

Child

Family

Aged 65

Managerial,

County

State

2015

or More

Poverty

Income**

or Older

Professional

Fairfax

VA

1,142,234

67.05%

8.65%

$105,374

60.95%

56.28%

Montgomery

MD

1,040,116

65.09%

8.24%

94,776

55.14%

56.36%

Collin

TX

914,127

60.15%

9.24%

98,745

40.32%

53.00%

Middlesex

MA

1,585,139

62.86%

9.53%

96,318

38.64%

53.91%

Nassau

NY

1,361,350

55.69%

8.75%

88,111

45.73%

43.95%

Bergen

NJ

938,506

56.74%

8.73%

83,503

42.69%

45.88%

Westchester

NY

976,396

56.57%

12.85%

86,929

42.82%

47.21%

DuPage

IL

933,736

58.61%

10.85%

87,464

39.40%

44.92%

Oakland

MI

1,242,304

55.63%

12.39%

90,159

35.31%

48.89%

Wake

NC

1,024,198

60.69%

14.59%

87,455

37.67%

47.91%

Fairfield

CT

948,053

55.38%

11.49%

87,167

42.56%

44.49%

Hennepin

MN

1,223,149

59.16%

17.45%

85,000

32.27%

48.17%

St. Louis

MO

1,003,362

54.42%

13.09%

87,856

32.17%

46.12%

Contra Costa

CA

1,126,745

48.24%

14.37%

79,142

41.47%

42.98%

Fulton

GA

1,010,562

56.75%

24.51%

79,817

31.08%

50.59%

Suffolk

NY

1,501,587

45.80%

9.76%

79,751

39.88%

37.75%

Travis

TX

1,176,558

51.54%

24.29%

78,643

38.36%

45.99%

Mecklenburg

NC

1,034,070

52.85%

20.97%

75,853

30.89%

42.82%

Allegheny

PA

1,230,459

52.93%

18.71%

76,719

23.31%

43.95%

Prince George's

MD

909,535

38.10%

13.99%

71,686

41.68%

38.11%

Honolulu

HI

998,714

46.17%

12.70%

68,662

38.06%

35.97%

Franklin

OH

1,251,722

46.87%

24.22%

71,787

27.16%

42.37%

Salt Lake

UT

1,107,314

41.53%

15.52%

73,409

28.94%

37.31%

Erie

NY

922,578

47.32%

23.46%

70,612

22.91%

38.37%

Palm Beach

FL

1,422,789

42.77%

21.93%

62,178

31.97%

35.04%

Sacramento

CA

1,501,335

39.07%

24.04%

64,801

30.53%

37.57%

Pinellas

FL

949,827

42.40%

22.03%

61,049

24.14%

37.34%

Hillsborough

FL

1,349,050

41.83%

23.21%

60,730

24.82%

37.05%

Cuyahoga

OH

1,255,921

41.95%

29.68%

67,197

21.60%

39.89%

Pima

AZ

1,010,025

39.43%

26.16%

59,245

28.29%

35.63%

Orange

FL

1,288,126

45.08%

25.53%

55,370

21.81%

35.92%

Milwaukee

WI

957,735

39.69%

32.09%

57,491

21.29%

36.46%

Shelby

TN

938,069

37.01%

35.55%

60,954

27.94%

34.27%

Duval

FL

913,010

37.66%

27.53%

59,373

22.16%

34.70%

Marion

IN

939,020

37.22%

32.33%

56,464

19.63%

33.32%

Philadelphia

PA

1,567,442

34.36%

36.90%

44,438

17.25%

36.05%

Fresno

CA

974,861

28.20%

38.87%

49,676

22.14%

27.98%

Bronx

NY

1,455,444

28.22%

43.28%

31,407

17.31%

24.80%

*All counties in the United States with a population between 900,000 and 1,600,000 in 2015. **Adjusted for the cost of living. Source: Compiled by Donald Grimes and George Fulton, University of Michigan, using data from the American Community Survey 2014. Population data are from the Census Bureau population estimates program as of April 2016.

Presentation Review

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