The state got another look Friday at just how much money they’ll have to work with as they put the finishing touches on the state budget.
The Consensus Revenue Estimating Conference Friday morning brought encouraging economic news for the state.
The past year has seen no shortage of challenges for state and local economies.
Despite that, the latest numbers show Michigan expecting an extra $2 billion in revenue for the upcoming 2021 fiscal year and $1.5 billion more for fiscal year 2022.
“Our judgement is that the economy is fundamentally healthy as of 2019, and we look at the prospects ahead, there are not any obvious imbalances to the economy or overhang on household and business economy that we expect to slow down the recovery the same way there were coming out of the great recession,” said Gabriel Ehrlich, Director of Research Seminar in Quantitative Economics at the University of Michigan.
Economists say federal stimulus has helped offset any major holes in the state budget from lost revenue and also helped drive consumer spending.
The rollout of the coronavirus vaccine allowing people returning to work is also driving state revenue.
“I would encourage people to focus on a broad range of indicators to access Michigan’s economic recovery, rather than any one particular indicator such as the unemployment rate. I think a big question about the economic outlook right now is what will happen when the federal stimulus wears off and the economy needs to sink or swim on its own,” said Ehrlich.
And that is the big question economists will watch closely in the coming months.
They caution the economy remains largely at the mercy of the pandemic in the coming months.
“We continue to believe that the path of the pandemic is still the largest risk for both the U.S. and Michigan economic. The path of our pandemic, and our path back to normal will drive a lot of the economic outcomes,” said Eric Bussis, with the Office of Revenue and Tax Analysis.