Detroit City Wire

The future business outlook for the metro Detroit region shows both promise and challenges, according to the State of the Region 2025 report from the Detroit Regional Chamber, released today. Stable economic conditions and major investment projects buoy the outlook, whereas uncertain federal economic policies, technological pressures, and slow population growth present challenges.

The report highlights several encouraging signs, including stable economic conditions nationally, with low unemployment and positive job growth in 2024. U.S. manufacturing showed improvement heading into 2025 after a contraction over the past two years. The passing of Michigan's R&D tax credit in January 2025 aims to stimulate investments and bolster growth, leveraging the state's research capabilities.

Key regional investment projects highlighted include the Gratiot Innovation District, the Gordie Howe International Bridge, Hudson’s Detroit, and research centers from the University of Michigan and Michigan State University.

Sandy K. Baruah, president and CEO of the Detroit Regional Chamber, stated, "The region’s economic momentum continued in 2024 with low unemployment, increased new business applications, and exports reaching a five-year high." Michigan leads in business-funded research and development and next-generation mobility investments, attracting increasing venture capital investments.

Challenges include uncertainty from potential federal policy changes, such as tariffs and federal funding cuts. The report notes significant pressure on Michigan’s automotive and mobility sectors from emerging technologies and global competitors. Limited population growth, primarily through international migration, also adds uncertainty to future growth.

Baruah noted, “Despite the region’s growth trajectory, we trail the national average as well as our national regional competition.” The Detroit region lags in educational attainment, GDP growth, population, and employment growth, which impacts the ability to retain high-tech talent.

The Detroit region's economy has grown over the past three years but still lags behind peer regions and the national GDP growth rate. The unemployment rate in January was 4% nationally, 5.3% in Michigan, and 5.1% in Detroit. Employment has grown marginally since 2019.

Top industries in the region include healthcare and social assistance, manufacturing, professional services, retail trade, and government. Key takeaways from the report include the region's resilience, its lagging metrics compared to peers, inflation concerns, and Michigan's strong business environment.

Michigan's economy remains vulnerable to trade policy fluctuations, given its reliance on exports and proximity to Canada. Baruah emphasized, “The overall economy has been strong, inflation continues to decline from its 2022 peak, the labor market remained solid in 2024, and robust consumer spending fueled GDP growth.”