Retooling is nothing new for the city that put the world on wheels. It turns out that Detroit's economy still has enough torque to keep pushing up employment, wages and household incomes.
The city recently has experienced labor disputes, high interest rates, shifting trade policies and uncertainty surrounding its auto industry. However, University of Michigan economists consider this volatility "a pause in its growth path," and expect moderate growth over the next five years.
That's the main message of the Detroit Economic Outlook for 2025-30, produced as part of the City of Detroit-University Economic Analysis Partnership between U-M, the city of Detroit, Michigan State University and Wayne State University.
Detroit's unemployment rate, which has been on a gradual but steady rise since 2024, is expected to increase to an average of 10% this year. However, economists forecast it will edge down one-tenth of a percentage point next year and drop to 9.5% by 2030.
The report notes the city's average labor force count has reached its highest level since late 2010, while its unemployment rate has roughly remained in the single digits. That's encouraging, the report says, because it's occurred in a time of high interest rates and volatile international trade policies.
Another encouraging sign: The jobless rate gap between Detroit and the state has narrowed substantially over time, falling from 12.3 percentage points in 2010 to 3.3 points in 2023. The researchers expect it will widen to 4.5 percentage points this year but narrow to 4.1 points by 2030.
Similar trends are seen in wages and income growth. The forecast calls for wage growth of Detroit residents to slightly outpace the statewide average, gradually narrowing the long-standing gap with wages city businesses pay.
By 2030, Detroit residents' average wages are forecast to rise to 53.6% of the average wage earned at jobs in city establishments-the highest reading since the start of the researchers' data in 2010.
Detroit's prominent blue-collar industry group-which includes manufacturing, wholesale trade, construction, transportation, warehousing and utilities-fittingly finds itself recalibrating for growth as well. The economists say the sector shed an estimated 1,300 jobs in the final quarter of 2025 as General Motors' Factory Zero reduced production and dropped to one shift, but they see the overall sector returning to growth by the end of this year.
To be sure, there's short-term pain as the auto industry in particular adjusts its current and future production away from electric vehicles and toward those powered by traditional internal combustion engines-reflecting priority shifts by the federal government. Yet by 2030, blue-collar industry employment is expected to be roughly 12% above its pre-pandemic level.
"While growth over the next five years is expected to be moderate, Detroit's economy demonstrates notable resilience, as the current pause transitions to steady gains in employment, wages and household income," said Gabriel Ehrlich, director of the Research Seminar in Quantitative Economics, the U-M unit in the partnership.
Ehrlich's co-authors are Jacob Burton, Don Grimes, Daniil Manaenkov, Michael McWilliams and Yinuo Zhang.
