Washtenaw County economic report shows full COVID recovery, continued inflation, rising employment

The local economy's future is looking bright, according to the 2024-2026 Economic Outlook for Washtenaw County report. The 39th annual report was unveiled at the President’s Leadership Recognition Luncheon at Washtenaw Community College on April 18. 

"Washtenaw County has recovered now from the pandemic recession," economist Gabriel Ehrlich told Concentrate prior to the luncheon. "It's the first bit of good news, and it shouldn't be taken for granted."

He explains that it took Washtenaw County about 16 years to recover from the downturn that began in 2001. COVID-19 recovery, by contrast, has taken three years.

Ehrlich and economist Donald Grimes presented the report to more than 200 business, industry, government, and community leaders at the event. 

"I was looking at our presentation the night before, and I was shocked by the recovery," Grimes said. "That is what I was most struck by."

However, residents will still need to brace for continued inflation.

"Inflation is going to stay higher than I think people in Southeast Michigan have become accustomed to before the pandemic," Ehrlich cautioned. "We do expect inflation, and we  continue to monitor it. It has proven to be worse than we've expected. That's the downside."

He added, "It's never fashionable to be optimistic and positive about the economy, and you can always point to things to complain about. When we say things are pretty sunny, people think, 'What reality are you guys living in?'"

He points to an optimistic forecast of sustained payroll job growth through 2026. Jobs are projected to increase 3.7% above pre-pandemic levels. (Statewide, the growth compared to pre-pandemic levels is forecast at 2.4%.) This is paired with an expected slow decline in the county’s unemployment rate. The report shows a decrease from 3.3% unemployment in the fourth quarter of 2023 to 2.8% by the end of 2026.

While employment trends are positive and unemployment is very low in Washtenaw County, wages haven't kept up.

"Wages have fallen over the last three years. Real wages in 2026 are only going to be 1% higher than they were in 2019," Grimes says. "Some of this dissatisfaction that people in general have relates to the fact that real wage growth will be barely higher in 2026."

"When you combine that with the housing costs in Washtenaw County, that really pinches families," Ehrlich says. "House prices have basically doubled in Washtenaw County since 2010. Zillow data shows rent in Washtenaw County has risen by about 50% since 2015."

Noting many reasons for rising housing prices, Ehrlich and Grimes say a major culprit is that new construction has not kept pace with housing demand.

"Our data on residential building or building permits in the county show that they have not caught up to where we were before the Great Recession," Erhlich says. 

He underscores that when residents drive around the county, there are indeed traffic and construction detours. And while construction may seem common, it's actually substantially slower than it was 10, 15, or even 20 years ago. 

"A lot of times it's easy to look at all the new building as a nuisance," he says. "But, in fact, we rely on that to help keep housing affordable and make the county a better place."

Jaishree Drepaul is a writer and editor based in Ann Arbor. She can be reached at jaishreeedit@gmail.com.

Photos by J.D. Scott.