The good news for Michigan is that the U.S. auto industry is roaring back. That's also the bad news.
The good news for Michigan is that the U.S. auto industry is roaring back.
That's also the bad news.
On the surface, that might seem to be a contradiction. But this has been the case for our state for the last 50 years, as we've relied on one industry for our economic salvation.
But first, the good news. GM, Chrysler and Ford all posted double-digit sales gains last month over August 2012, even as other economic indicators dipped, like the stock market.
"Detroit has come full circle, from bankruptcy to boom" since the last recession, Bloomberg News reports, and the automakers remarkably are "reaping profits not seen since the turn of the century."
GM sales are up about 15 percent since its best month five years ago, while Ford and Chrysler are posting 12 percent gains apiece. The Detroit Three's strength is reflected in stock prices, as well, with Ford shares spiking 31 percent this year and GM's up 24 percent.
“Any question that the industry is back should be put to rest,” Jeff Schuster, auto analyst for researcher LMC Automotive, told Bloomberg.“In 2007, there was no margin on cars; the Detroit Three were giving them away. Now we’re seeing a much different environment, where they’re much more competitive.”
That's quite a feat.
And it's time that we laid to rest the trope that federal intervention by Presidents Bush and Obama did nothing to help the domestic auto industry. It's clear now that the auto bailout worked for GM and Chrysler shareholders -- and saved over 1 million jobs, according to the Center for Automotive Research.
There's a reason why even the very conservative Detroit News editorial page has repeatedly backed the auto rescue. It's time for holdouts like Hillsdale College Professor Gary Wolfram, who said during a taping of Off the Record this summer that the bailout failed, to admit they were wrong.
Wolfram and other libertarian-minded folks can still make their case that government doesn't work. But the auto rescue doesn't fit this mold.
Even Mitt Romney's inner circle seems to given up the ghost about the autos, years after the former presidential nominee famously declared, "Let Detroit go bankrupt" in a New York Times editorial. Romney's allies have now shifted the argument that he's been vindicated by the city of Detroit's bankruptcy (even though that wasn't the issue the Republican was arguing in 2008).
So now for the bad news. Michigan continues to recover slowly from our decade-long recession. The Wolverine State shed 1 million jobs from 2000 to 2010. In 2012, we only gained 43,800 jobs.
There's a long way to go.
Unemployment in July actually ticked up to 8.8 percent, although there was a slight bump in overall employment. But that's well above the 7.4-percent national jobless rate, and Michigan still sports the fifth-highest unemployment rate in the country.
Still, Lt. Gov. Brian Calley this week proclaimed that Michigan is on the verge of the "the greatest comeback the nation has ever seen," due to its manufacturing renaissance.
His enthusiasm is understandable. But it's worth noting that there are still some red flags about Michigan's overall economic health.
And the biggest red flag is that Michigan is continuing its cycle of dependence on the auto industry.
That's why groups from both sides of the ideologicial spectrum, like Business Leaders for Michigan and Michigan Future, argue that our state can't stay mired in the old manufacturing economy. The new economy is knowledge-based, and we should embrace it. One way to do so is spending more on higher education, so workers have the right training to succeed.
So while the Detroit Three are on the upswing -- it's being billed as the "one bright star" in a lackluster economy -- that can rapidly change.
It stands to reason that auto sales will go down again at some point. And that will leave a big dent in the Michigan economy -- perhaps before we've even recovered from the last downturn.
Susan J. Demas is a political analyst and an award-winning journalist. She can be reached at sjdemas@gmail.com. Follow her on Twitter here.