Economic Incentive: American Recovery and Reinvestment Act of 2009

The American Recovery and Reinvestment Act of 2009 was passed by Congress and signed into law by President Obama in February of 2009. The Recovery Act provided various economic incentives in order to address the national economic crisis. The incentives included tax cuts and benefits, funding for entitlement programs, and funding for contracts, grants, and loans. Its intention was to create new jobs, keep existing jobs, and encourage economic activity. Recipients of the Recovery Act funds are required to submit reports every January, April, July, and October; the data from these reports are publicly available at  On July 30, 2012, Drawing Detroit retrieved the most recent data on the distribution of Recovery Act funds from to examine how the act impacted Michigan.

The first chart shows the 10 states in the nation with the highest amount of awarded Recovery Act funds cumulative from February 2009. California has been awarded the most funds at over $34.7 billion. Michigan has been awarded the eighth highest amount at over $8.6 billion, approximately a quarter of the amount awarded to California.

The second chart shows the 10 states with the highest number of recipient reported jobs in Quarter 2, 2012 (April 1 – June 30, 2012) based on the Recovery Act funds. Many of the same states appear in both charts, but some do not. Michigan is not in the top 10 for the number of jobs; it is 14th in the nation with 3,293 jobs created through the Recovery Act. California has the highest value with 19,024 recipient reported jobs.

The first chart shows the total Recovery Act funds awarded to the states that border at least one of the five Great Lakes; the amounts are cumulative from February 2009. The total amount of funds awarded to Michigan is approximately half the amount awarded to New York, which received over $17 billion. Michigan has been awarded funding similar to amounts awarded to Ohio and Pennsylvania.

The second chart shows the number of Recovery Act recipient reported jobs for the  eight Great Lakes states; the numbers are for Quarter 2, 2012 (April 1 – June 30, 2012).

Eleven agencies have each awarded over $100 million Recovery Act funds to recipients in the State of Michigan. The first chart shows the total amount of funds awarded cumulative from February, 2009 from each of those agencies. The Department of Education has awarded the highest amount of funds in Michigan (i.e., over $2.6 billion). The Department of Energy has awarded over $1.6 billion, and the Department of Transportation has awarded over $1.3 billion. The remaining eight agencies have each awarded less than $600 million to recipients in Michigan.

The second chart shows the number of jobs in Quarter 2, 2012 (April 1 – June 30, 2012) that Michigan recipients reported for the funds awarded by the 11 agencies. Recipients reported about 766 jobs using funds from Department of Energy awards, which is the highest number of jobs among the 11 agencies. The fewest number of jobs reported by Michigan recipients is 70.42 jobs using Environmental Protection Agency awards.

The first chart shows the total Recovery Act awarded funds cumulative from February, 2009 for the seven-county Southeast Michigan region. Three counties (i.e., Livingston, Monroe, and St. Clair) have each been awarded less than $10 million, with the lowest amount awarded to Livingston with just under $2.9 million. Wayne County has received the highest cumulative amount at over $1.1 billion. The same data pattern appears for the number of jobs recipients in the seven-county region reported in Quarter 2, 2012 (April 1 – June 30, 2012). Wayne County recipients reported the highest number of jobs (i.e., 761) while Livingston recipients did not report any jobs and only two were reported in Monroe and St. Clair counties.

The first chart shows the 10 cities in the State of Michigan with the highest amount of awarded Recovery Act funds cumulative from February 2009. The amounts range from over $1.7 billion in Lansing to just under $150 million in Wayne. Besides Lansing, only two other Michigan cities have been awarded over $500 million in Recovery Act funds; these are Detroit and Ann Arbor. The second chart shows the 10 Michigan cities with the highest number of recipient reported jobs in Quarter 2, 2012 (April 1 – June 30, 2012), based on the Recovery Act funds. Most of the cities in the second chart also appear in the first chart. Lansing, Detroit, and Ann Arbor again appear as the top three, in that respective order (i.e., 1067.6 jobs in Lansing, 662.5 in Detroit, and 373.6 in Ann Arbor).

The climate situation in Michigan

The chart above, which has been provided by the Intergovernmental Panel on Climate Change Third Assessment Report, shows that temperatures in the northern hemisphere have been increasing since the 1900s. Despite the increase over the last 100 plus years, there was a slight drop in temperatures around the 1980s. However, since then the average temperature in the northern hemisphere has been increasing. The National Oceanic and Atmospheric Administration reports that in 2012 alone, Michigan has had 12 record high heat days.

The above chart shows the average yearly temperature in Michigan from 1895 to 2012. While there have been several ups and downs over the last 117 years, the average temperature to date in 2012 has proved to be the highest at 48.49 degrees. This figure, however, only takes the months January through July into consideration. The highest full yearly average in recent history was 46.93 degrees in 1998. The average yearly temperature in 2011 was about 4 degrees lower than the 1998 average.

The above chart shows average temperatures for May, June and July from 1980 to 2012. While the average temperatures over this time span do not show a consistent pattern, there is evidence that in recent years the average temperatures have been increasing. For example, for the month of July there was about a 10 degree average increase from 2009 to 2011; the climate then leveled off from 2011 to 2012. In May, there was an increase from 2008 to 2010 and in June there was an increase from 2009 to 2010.

The above charts show that not only have temperatures in Michigan been above average, but so have the water temperatures of the Great Lakes. Lakes Superior, which is the largest and deepest of the lakes, has experienced the highest above average temperatures of the five lakes. Lake Huron and Lake Erie (the smallest and shallowest) have experienced the least fluctuation from the average temperatures they have experienced in years past (1992-2011). The elevated water temperatures can be attributed to the higher air temperatures that Michigan and the Midwest region have been experiencing this year.

Michigan’s drought situation

According to the National Oceanic and Atmospheric Administration, July 2012 was the hottest month on record. Like every state in the U.S., Michigan experienced the extreme heat and has since been suffering drought conditions in certain areas. Due to the current climatic changes we have put together a series of posts that explores current and past precipitation and drought data.

This chart, provided by National Oceanic and Atmospheric Administration, displays the precipitation that fell in Michigan during the months of May and June for each year from 1900 to 2012. While precipitation amounts vary over time for the state, this chart shows precipitation amounts from May to June of 2012 are at about 150 mm, or 6 inches. In 2006 and 2007 precipitation amounts were at about 130 mm, or 5 inches. While May-June of 2012 hasn’t experienced the lowest amount of precipitation in the last 10 years, the precipitation numbers are lower than years 2008-2011 during the months of May-June.

In Michigan, July typically has less precipitation than June. This chart shows that over time the recent amount of precipitation the state has received has been in accordance with the long-term average amount of precipitation typically received during these two months. According to NOAA, the long-term trends for precipitation in June and July are about 3.1 and 2.9 inches respectfully.  The 2012 average for June of 3.09 and the 2011 average for July (which is the most recent data) is the lowest it has been since 2009. The precipitation amounts appear to spike and dip in a somewhat cyclical trend so this slight dip is relatively normal.

This drought map, reflecting conditions through July 24th 2012, shows several areas in the State of Michigan that are experiencing moderate drought or abnormally dry conditions. The majority of the Upper Peninsula is considered to be abnormally dry and much of the southern part of the state is considered to be experiencing severe drought; small portions in the southern areas of the state are also in extreme drought.

On July 25, 2012, the United States Department of Agriculture (USDA) deemed 76 counties across six Midwestern states as natural disaster areas due to drought conditions causing large crop losses for farmers.  In addition to counties declared as natural disaster areas on July 25, there are about 1,300 total counties across the Midwest states that have been deemed natural disaster areas. The Michigan counties currently deemed natural disaster areas are Berrien, Branch, Calhoun, Cass, Hillsdale, Jackson, Kalamazoo, Lenawee, Saint Joseph and Van Buren.

This chart shows the number of years with drought conditions in Michigan from 1913 to 2012. In the three most recent 25 year periods examined here, there were about 15 years in each period where Michigan was affected by drought; this is equivalent to about 60 percent of the time. In the time period from 1913 to 1937, when the state of Michigan was most affected by drought, 18 of the 25 years were affected by drought conditions; this is equal to 72 percent of the time.  While Michigan is experiencing extreme drought this year this chart shows droughts in Michigan have been fairly common over time.

Michigan’s housing price index compared

The U.S. house price index , which measures the price of residential housing, gradually increased from a base value of 100 in the first quarter of 1991 to its peak of 223.97 in the third quarter of 2006. This value is more than double that from the first quarter of 1991. While there was a gradual increase in the index during this 15 year time span, it accelerated from a value of 136.58 in 2000 to 223.97 in 2006. This represents an increase of over 60 percent, compared to an increase of less than 40 percent during the previous 10 years (1990-2000). After 2006, the price index of the housing market began to decrease.  By the first quarter of 2012, the price index dropped to 179.44, about the same level observed during the first quarter of 2004.

The housing indexes from the first quarter of 1991 to the first quarter of 2012 for the whole US as well as the East North Central (Michigan, Wisconsin, Illinois, Indiana, Ohio), Pacific (Hawaii, Alaska, Washington, Oregon, California) , and New England (Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut) regions are presented above.

The graph shows there was a slight decline in the housing indices for the Pacific and New England regions from 1991 until about 1993. From there, the market began to level out until increases started to be seen around 1996. The housing indices for all regions shown on the graph then started to climb, and they reached their peaks in 2006.  The country as a whole reached its peak index in 2007. The highest point in the Pacific region was 280.53 in the second quarter of 2006. This is almost triple the housing index price in the first quarter of 1991. Despite the Pacific region having the highest housing price index, it also had the greatest decline following its peak in 2006. In less than two years, the index plummeted to 187.93 in the first quarter 2008, losing about one third of its value. Overall, the East North Central region experienced fewer fluctuations than any other area represented on the graph.

Compared to the nationwide trend, Michigan’s housing index value has been more mild. Michigan, however, like other states and regions in the U.S., experienced a decline in housing prices after 2006. This decline continued through the 2009 economic crisis and into 2010, despite a slight increase in value in 2009.  The housing price index in Michigan hit its all time low in 2011. The housing index in Michigan is currently at 139.66, 40 percent higher than its value in 1991. This current index is approximately the same as that from 1997.

Michigan has one of the 25 largest Metropolitan Statistical Areas in the U.S.  This area includes Detroit, Warren, and Livonia. This graph compares the housing price index for the MSA to the state as a whole from the first quarter of 1991 to the first quarter of 2012.  The MSA has a trend line that is almost identical to that of the state. Both lines peaked in 2005 at slightly over 200 points in the index, and both have dropped about 70 points since then. Currently, the state is near its 1997 levels and the MSA is near its 1995 levels.

The following graph compares the median house price for the U.S. and Michigan from the first quarter of 2000 to the second quarter of 2010. In 2000, the median price of a house in Michigan was close to the national price; Michigan’s median price was about $120,000 and the national median price was about $126,000. Following the year 2000, however, the gap began to increase, with the national median price increasing steadily while Michigan’s slowly increased through 2005.  That year was the peak for Michigan’s median house price; it was about $144,000. At that time, the nation’s median house price was about $212,000 and still increasing. The national median house price reached its peak in 2006 at about $224,000. Following the U.S. peak, a decline in housing prices began and by the second quarter of 2010, the U.S. median housing price had decreased by $43,721 to $180,176. From Michigan’s peak, the median housing price decreased by $48,108 from 2005 to 2010.