Gretchen Whitmer warns Michigan: ‘Undeniable signs of an ailing economy’

Gov. Gretchen Whitmer warns Michigan stands to suffer from economic “uncertainty”
Second-term Democrat criticized federal tariffs and urged lawmakers to pass a state budget and avoid a government shutdown
Warnings come as Michigan’s unemployment rate remains among highest in US and incomes are barely growing

LANSING — In a Michigan Capitol speech, Gov. Gretchen Whitmer on Tuesday criticized President Donald Trump’s tariffs and urged lawmakers to finalize a state budget given “undeniable signs of an ailing economy.”

“Stubborn inflation, stagnating wage growth, plummeting credit scores and debt piling up, especially for young people — creeping unemployment,” Whitmer said. “This is a man-made storm of uncertainty that hits Michigan hard.”

That makes it critical, she said, “for state legislators to do their job and pass a state budget swiftly to protect Michiganders from further disruption.”

It was a remarkable pivot for a governor who has spent the better part of her tenure as a cheerleader for the state, its economy and business climate.

“Companies are cutting, not creating jobs in Michigan. Costs are going up, not down,” Whitmer said.

Whitmer’s comments came amid growing concern over the economy: Michigan’s unemployment is among the highest in the US, incomes are barely growing and slow national job growth could hit hard in a state dominated by manufacturing.

“There’s an old saying that when the U.S. catches a cold, Michigan gets the flu,” Whitmer said. “And right now, there are undeniable signs of an ailing economy.”

Related:

In her less than 20-minute address, Whitmer had pointed criticism for federal tariffs that have had a large impact on key sectors of the state economy, including the automotive industry and agriculture, which she called “Michigan’s two largest and most critical industries.”

Despite bemoaning his tariff strategy, Whitmer did not mention Trump by name. She noted only that she went to the Oval Office to “secure a fighter mission for the Selfridge Air National Guard Base” — by lobbying the president.

A government shutdown looms

Whitmer’s economic warnings came two weeks before the end of Michigan’s fiscal year and a constitutional deadline to finalize a balanced budget. Without a deal between Whitmer and the Legislature by Oct. 1, broad swaths of state government will be forced to shut down.

As that deadline looms, negotiations between the Republican-led House and Democratic-led Senate have been tense, with the two chambers seeming to remain far apart on what could be a more than $80 billion spending plan.

“There are moments when we feel like we make progress, and then the next day, when it comes to actually putting pen to paper … suddenly the progress seems to disappear,” Senate Majority Leader Winnie Brinks, D-Grand Rapids, told reporters after Whitmer’s speech, calling it “a pattern that we have seen from House Republicans.”

A close-up of Senate Majority Leader Winnie Brinks, D-Grand Rapids. — Senate Majority Leader Winnie Brinks, D-Grand Rapids, said Tuesday that budget negotiations with House Republicans have been challenging. (Simon Schuster/Bridge Michigan)

House Speaker Matt Hall, R-Richland Township, has offered pessimistic assessments as well: “We are not getting anywhere,” he said earlier this month.

But he appeared optimistic in a statement after her Tuesday speech, saying “I think she and I can strike a deal.”

In her speech, Whitmer noted that the Senate passed a budget “125 days ago” but the House did not pass a spending plan until nearly 100 days later, well after a July 1 deadline written into state law.

The House proposal, she made clear, is “not one that I would sign.”

The Republican budget plan would slash billions of dollars in state spending, including cutting funding for hundreds of positions in the Michigan State Police, remove 55% of funding from the independent Department of Civil Rights’ budget, about 30% from Attorney General Dana Nessel’s office and 24% from Secretary of State Jocelyn Benson’s department.

State department heads have blasted the House budget in recent days, ramping up pressure on Republicans before Whitmer’s speech with warnings, including:

Nessel has warned the House proposal would require her to lay off key, public-facing staff, including victim advocates in criminal prosecutions. She told reporters some counties would become “literally like ‘The Purge,’” if funding for assistance for county prosecutors is cut.
Benson has argued the proposed cuts would lead to long wait times at Secretary of State branch offices.
The House plan would eliminate 1,600 positions in the Michigan Department of Health and Human Services, which would mean fewer staff investigating child abuse complaints or allegations of “fraud, waste and abuse” to “ensure taxpayer dollars are being spent properly,” Director Elizabeth Hertel said in a Monday statement.
The House Republican budget “slashes more than a third” of the budget for the Michigan Department of Agriculture and Rural Development, Director Tim Boring said. “This includes significant cuts to food safety work, emergency response and preparedness, and customer service operations.”
The plan calls for “laying off more than 150 filled positions” in the Department of Environment, Great Lakes, and Energy, according to Director Phil Roos, who said it “guts the very workforce responsible for protecting our air, land, and water.”

Michigan Democratic Party chair Curtis Hertel, who attended Whitmer’s speech, said that “as a state party chair, I’m a big fan of” the House’s budget for its political opportunities, arguing if the budget is “the stamp they want to go in defending in a shutdown process, I think they’ve already put themselves in a really bad position.”

Hall has alleged state departments are “squirreling away funding” that could otherwise be used to pay down state debt.

“We proved you can fix the roads with just the waste, fraud and abuse in government if you make it a real priority, Hall said in a statement. “Democrats can’t even put a roads plan on the table.”

Responding to Whitmer’s speech, Senate Minority Leader Aric Nesbitt, R-Porter Township, blamed economic woes on Whitmer and Lansing Democrats.

“It’s time to lead Democrats to the bargaining table to pass a balanced budget that fixes Michigan’s crumbling roads and bridges, puts kids first by focusing on reading and math, and respects taxpayers enough to not reach deeper into their pockets,” he said in a statement. “Republicans have put forward real plans to do this.”

Senate Democrats approved their budget plan before Trump signed into law the “big, beautiful bill,” which significantly curtailed federal funding for state programs. Fiscal experts have since lowered state revenue estimates for next year that would require changes to the Senate proposal.

House Republicans, meanwhile, have joined Whitmer in pushing for long-term road funding to be part of budget negotiations. Hall, the state House Speaker, has repeatedly castigated the Senate for not proposing a roads plan of their own.

The House Republican plan would raise more than $3 billion a year for roads, in part by gutting Whitmer’s key economic development programs. Whitmer has instead proposed raising a portion of the road funding from new sources, such as a new tax on marijuana.

The budget impasse has frustrated schools, which have been forced to finalize their own spending plans without knowing how much funding they’ll receive from the state, or if key programs — such as free universal breakfast and lunch for students — will continue.

In her speech, Whitmer said she thinks she and legislative leaders can find a way to fund roads, protect Medicaid and continue providing free school meals, while also delivering on some House goals, including spending cuts and increased transparency.

“If we do this right, we can all win,” she said. “We can govern — which means we all compromise.”

Whitmer: ‘We’re all paying the price’ for tariffs

Whitmer also used her speech to criticize aggressive tariffs implemented by Trump, who she did not directly name. “When used strategically and precisely,” tariffs can help the economy, she said, but “you can’t capriciously swing the tariff hammer at every moment.”

Tariffs are already having an impact on food prices and agriculture exports in Michigan, according to a report released Monday by the state Department of Agriculture and Rural Development.

In the first half of 2025, Michigan soybean meal exports fell by 46% compared to the prior year, wheat exports declined 89%, fresh cherry exports fell 62% and fresh apple exports declined 58%, according to the department.

Whitmer’s address came a week after she returned from an economic investment trip to Singapore, Japan and Germany to recruit companies to the state, which she said has already produced several announced investments and jobs.

But as she discussed the impact of tariffs on the auto industry, her frustration was palpable.

Companies abroad “want to invest in Michigan, but tariffs are keeping them on the sidelines,” she said.

“Businesses need certainty to hire workers, plan inventory and grow … and right now they don’t have it,” Whitmer added. “We’re all paying the price.”