Stateside: Where Michigan stands in the fiscal cliff
With the approaching "fiscal cliff" comes the concern of protecting Michigan’s businesses.
We spoke today with Susan Tompor of the Detroit Free Press about the fiscal cliff.
Tompor noted that many companies are not laying off their workers.
“Back in November we had Ford Executive Chairman Bill Ford Jr. state that it was vitally important that they work on this bipartisan agreement for the economy. When you’re selling big-ticket items, it’s a key issue. Will consumers need to cut back if we got over the fiscal cliff? Right now, according to Mark Zandi [Chief Economist, Moody’s Analytics], he doesn’t see that companies are cutting back. The reason is that it would be costly to lay off workers now to prepare for what might be a temporary problem. Instead Zandi said that, overall, businesses are more likely to cut back on investing in heavy equipment as a stop-gap measure,” said Tompor.
Tompor said an agreement between politicians could potentially be reached.
“Business managers are going to start pulling back a little more. We are in a tentative economy, but right now there is the thought that some agreement would be reached. But doing nothing and permanently going over the fiscal cliff- and again most experts are not expecting that to happen-would be very costly for jobs.”
“When you talk about the fiscal cliff there are also cutbacks in federal spending that are triggered. About 2.4% of Michigan’s GDP depends on federal spending on procurement, salary and wages.”
While not drastic, Michigan’s economy is expected to grow, said Tompor.
“Right now Michigan’s economy is expected to have a modest growth next year of two percent.
“The Federal Government’s tax system amounts to about 17% of the GDP; the Federal spending is about 24% of the GDP…It’s something that has to be fixed.”
But thankfully, said Tompor, economic breakdown is not on the radar.
“They don’t think it’s another meltdown of the economy…so that’s a good thing.”
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