MSU Economic Forecast Model

2027-2028 Michigan Economic Outlook

Updated August 31, 2026

The U.S. economy has transitioned into a mature, moderate-growth phase marked by high volatility and structural risks. The Federal government continues to pursue an expansionary fiscal stance, characterized by the "One Big Beautiful Bill Act," which drives long-run structural budget deficits alongside a record $38 trillion national debt. While 10% tariffs on imports aim to boost domestic manufacturing, these revenues have not been sufficient to offset income tax reductions, pushing the Federal Reserve to maintain elevated yields to counter persistent inflationary pressures. Core inflation (CPI) is projected to moderate toward 2.7% by 2028, but long-term borrowing costs remain high, with the 10-year Treasury yield projected to climb to 5.07% and the 30-year yield to 5.44% by the end of 2028. Despite tight labor markets constrained by restrictive immigration policies, total nonfarm employment is forecast to expand from 155.89 million in 2023 to 162.71 million by 2028. Concurrently, the automotive sector faces structural realignment as automakers navigate shifting demand trajectories between internal combustion engine (ICE) platforms and electric vehicles (EVs) amid localized trade measures. National per capita personal income is projected to reach $90,467 by 2028, establishing a benchmark for regional comparisons.

Updated August 31, 2026