Economy in Michigan: Guide to Growth, Industries, and Rankings

The economy in Michigan has always been closely tied to its identity as the “Great Lakes State”. From its historic leadership in the automotive industry to its present-day diversification into technology, health care, and advanced manufacturing, Michigan’s economic story is one of resilience, reinvention, and steady growth.

As of 2025, Michigan stands as one of the Midwest’s most dynamic economies, balancing its legacy industries with modern innovation. In this article, we’ll take a comprehensive look at the Michigan state economy, its growth trajectory, its ranking compared to other U.S. states, and how its various industries shape prosperity across the region.

Overview of the Michigan State Economy

Michigan’s Gross State Product (GSP) reached around $650 billion in 2025, making it the 14th-largest economy in the United States, and the state is still the heart of the manufacturing corridor in the Midwest of the US.

The main features of the economy in Michigan include:

• Population Base: The more than 10 million people living in the state are the source of the labor force and the consumer demand.
• Strategic Location: As a state that is adjacent to four great lakes and Canada, Michigan is a transportation center for the whole of North America.
• Diverse Industries: Despite the fact that automotive still occupies first place in the state, the industries of aerospace, information technology, renewable energy, and life sciences have been growing fast.
• Export Strength: Among all the states of the United States, Michigan is in the first position regarding exports of vehicles, machinery, and agricultural products, among other things.

The great variety of the state allows it to survive the crisis much better than in the past decades, when it was a big loser due to the decline of the auto industry.

Key characteristics of the economy in Michigan

Michigan Economic Growth: Trends in 2025

Steady Recovery and Expansion

Michigan has experienced sustained economic growth since the pandemic years of the early 2020s. With GDP growth rates averaging around 2.5–3% annually, the state continues to outperform many neighboring Midwest economies.

Drivers of Michigan economic growth include:

• Resilient Automotive Sector: Transition to electric vehicles (EVs) and autonomous driving technology has revitalized Michigan’s auto industry.
• Technology Hubs: Cities like Ann Arbor and Grand Rapids are emerging as tech centers, attracting startups and venture capital.
• Health Care Growth: An aging population drives demand for health services, with Michigan investing heavily in health infrastructure.
• Renewable Energy: Wind and solar projects are creating jobs and diversifying energy supply.

Job Market Outlook

Employment in Michigan has rebounded strongly. Unemployment rates remain close to 4% in 2025, roughly in line with the national average. New investments from major corporations in EV manufacturing plants and IT service centers are fueling job creation, particularly in skilled labor and STEM fields.

Michigan Economy Ranking: How Does the State Compare?

When it comes to national comparisons, the Michigan economy ranking paints an interesting picture:

• GDP Size: Michigan consistently ranks between 13th and 15th in the U.S. for overall economic output.
• Manufacturing Strength: Michigan is among the top 5 states for manufacturing output, continuing its historic leadership role.
• Exports: The state ranks in the top 10 for exports, thanks to its automotive dominance and proximity to Canadian markets.
• Workforce: Michigan’s workforce participation rate is higher than the national average, reflecting a strong labor supply.
• Business Climate: Michigan ranks mid-tier nationally but is improving due to tax incentives, investment in infrastructure, and workforce training initiatives.

Overall, while Michigan may not match the raw size of California, Texas, or New York, its strategic strengths in manufacturing, trade, and innovation make it one of the Midwest’s most competitive economies.

The economy in Michigan ranking paints an interesting picture

Michigan Economy by Industry: Key Sectors Driving Growth

One of the ways to understand an economy in Michigan is by looking at the industries within it. This is what is required to make sense of the Michigan economy by industry. The main pillars that keep the state economy going through various times are:

1. Automotive Industry

• Michigan remains the automotive capital of the planet and is still the hometown of the “Big Three”: General Motors, Ford, and Stellantis.
• The state is slowly phasing out internal combustion cars and going electric (EVs), which in turn is leading to the creation of new investments worth billions of dollars.
• Auto parts suppliers, testing facilities, and engineering firms continue to thrive around Detroit and Lansing.

2. Advanced Manufacturing

• Non-automotive, Michigan is excelling in the manufacture of parts for the aircraft industry, medical equipment, and general appliances.
• The company is employing the use of robots and automated systems in the production of goods, which has led to an increase in the productivity of the company.

3. Health Care and Life Sciences

• The health care sector in Michigan is a good employer to over 500,000 people, and in Detroit, Ann Arbor, and Grand Rapids, there are major hospital networks that play a significant role in that sector.
• Life sciences and medical device companies are rooted alongside the research universities, such as the University of Michigan.

4. Technology and IT Services

• Michigan is becoming a tech innovation hub.
• Ann Arbor is known for AI and software startups, while Grand Rapids attracts IT service companies.
• State incentives are drawing cloud computing and data center investments.

5. Agriculture

• Michigan is the second-most agriculturally diverse state in the nation, behind California.
• Key products: cherries, apples, blueberries, and dairy.
• Agri-tech innovation is improving yields and sustainability.

6. Tourism

• With the Great Lakes, Mackinac Island, and ski resorts in the Upper Peninsula, tourism remains a multi-billion-dollar industry.
• Outdoor recreation and eco-tourism are particularly strong post-pandemic.

Understanding the Michigan economy is by looking at the industries

Challenges Facing the Michigan State Economy

While growth is strong, the Michigan state economy faces some headwinds:

• Population Stagnation: The increase in Michigan's population is lagging behind the national average, which has caused anxiety about the availability of the working population in the long run.
• Infrastructure Needs: Congested roads and bridges, poorly maintained water systems, and inadequate public transportation have been around for a long time in the old cities and suburbs.
• Urban-Rural Divide: Wealth and opportunity are found in the city areas of Detroit, Grand Rapids, and Ann Arbor, while small towns and the countryside suffer from the lack of growth.
• Dependence on Autos: Despite the effort to spread its wings, Michigan is still very vulnerable to the global automotive market's ups and downs.

It will be very important to solve these problems in order to ensure that Michigan remains economically competitive over the next ten years.

Opportunities for Future Michigan Economic Growth

Looking ahead, several opportunities stand out in the economy in Michigan:

• EV Leadership: Michigan is positioning itself as the global leader in electric vehicle design and production.
• Tech Expansion: Continued growth in software, AI, and data centers will diversify the economy.
• Reshoring of Manufacturing: As U.S. companies bring production back from overseas, Michigan stands to benefit thanks to its skilled workforce.
• Green Energy Transition: Wind, solar, and battery storage industries will create long-term job opportunities.
• Cross-Border Trade with Canada: With Michigan’s proximity to Ontario, trade agreements and logistics hubs will expand export markets.

Several opportunities stand out in the Michigan economic growth

Regional Breakdown of the Michigan Economy

• Detroit Metro Area: Automotive, banking, supply chain, and software.
• Grand Rapids: Industrial, medical, and lifestyle products.
• Ann Arbor: Higher education, IT startups, and literature.
• Lansing: Public sector and financial services.
• Northern Michigan & UP: Seasonal recreation, farming, and power generation.

Every area of the state of Michigan is a different supplier for the whole state economy, which helps keep the economy stable and viable.

Final Thoughts

The economy in Michigan has moved away from those times when the state was almost completely dependent on carmaking. Although the automobile industry is still at the core of the state's identity, Michigan's real power today is in its diversification; the likes of healthcare, IT, agriculture, and renewable energy have all become important contributors to the workings of the state.

Solid GDP growth, improving competitiveness, and the Michigan economy's strong US state ranking reflect a bright 2025 forecast. The electric vehicle, advanced manufacturing, and technology sectors will not only create the future of Michigan’s economy but will be the main drivers of its economic expansion for the next several years.

At the same time, navigating business formation, compliance, and expansion in the U.S. can be complex. This is where experienced partners like OneIBC USA prove valuable. With expertise in U.S. company setup, corporate compliance, and advisory services, they provide the guidance needed to unlock opportunities in Michigan and beyond.