June 7, 2007 / 4:36 PM / 12 years ago

Michigan economy shrinks in 2 of last 3 years

WASHINGTON, June 7 (Reuters) - Michigan was the only state to suffer a shrinking economy last year, which was also the case two years prior, a federal government report said on Thursday.

Michigan’s real gross domestic product fell by 0.5 percent in 2006, grew by a meager 0.4 percent in 2005, and fell by 0.8 percent in 2004, according to data from the U.S. Commerce Department.

Real GDP is gross domestic product after adjusting for the impact of price inflation.

“Michigan was the only state to decline in 2006 due to declines in many sectors, particularly construction,” the Commerce Department said.

Michigan’s economy has sagged as manufacturers, particularly in the ailing auto sector, have slashed jobs. The state’s jobless rate zoomed up to 7.1 percent in April from 6.5 percent in March and its projected fiscal 2008 budget deficit has climbed.

The state’s fiscal woes have led all three Wall Street rating agencies in recent weeks to downgrade Michigan’s debt or slap a negative outlook on its ratings.

Meanwhile, many other states posted stellar year growth last year.

Idaho posted the strongest gain with real GDP rising 7.4 percent while Utah was a close second at 7.2 percent. Arizona and other southwestern states also tended to see robust growth last year.

Delaware saw the strongest per capita real GDP growth last year with a gain of more than $59,000. Government analysts attributed this to the state’s heavy concentration of finance and insurance companies.

Mississippi experienced the lowest per capita growth last year of about $24,000, or slightly less than two-thirds the national average. (Additional reporting by Karen Pierog in Chicago)

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