Ap Economic Stress Index

Michigan 2nd-worst state on economic stress index

Foreclosures remain stubbornly high, budget shortfalls are forcing state workers to take unpaid days off and thousands of workers tied to the domestic automakers are anxious about how they’ll fare with the refashioned Chrysler LLC and General Motors Co. out of bankruptcy.

The bleak truth, as President Barack Obama noted during a visit to Michigan this month, is that many of the hundreds of thousands of auto jobs lost over the past nine years simply “won’t be coming back.”

Michigan was second only to California in May according to the Associated Press Economic Stress Index, which combines three indicators — unemployment, foreclosures and bankruptcies — to gauge how the recession is affecting more than 3,000 counties in the United States. The higher the index’s number, the worse the impact.

A county is considered stressed when its score tops 11. Nationwide, 36% of counties were at that level or higher. In Michigan, just three of its 83 counties were below that limit. Many — including Wayne County, home to Detroit, and Genesee County, which includes Flint — had scores over 20.

With 740,000 people in Michigan out of work, more people are losing their homes each month and there’s little demand from buyers. The state has the nation’s seventh-highest foreclosure rate, with more than 13,600 filings in June, according to RealtyTrac Inc. Housing prices in the Detroit area have fallen 24% in the past year, under the S&P/Case-Shiller Home Price Index, and have dropped 56% since late 2005.

“No other state has lost as many jobs, and lost them so quickly and apparently so permanently,” says East Lansing economist Patrick Anderson, who doesn’t see Michigan’s economy turning around until employment begins to rise — something that might not happen until late next year.

“People need to have jobs and good prospects of employment before they can borrow money, before they can start businesses and before they can pay their bills,” he said.