On the whole, Michigan benefited from its position as the center of the auto industry during the first half of the 20th century when Detroit and other south Michigan cities were the fastest-growing industrial areas in the US. But the state's dependence on automobile production has caused grave and persistent economic problems since the 1950s. Michigan's unemployment rates in times of recession have far exceeded the national average, since auto sales are among the hardest hit in such periods. Even in times of general prosperity, the auto industry's emphasis on laborsaving techniques and its shifting of operation from the state have reduced the number of jobs available to Michigan workers. Although the state was relatively prosperous during the record automotive production years of the 1960s and 1970s, the high cost of gasoline and the encroachment of imports on domestic car sales had disastrous effects by 1980, when it became apparent that the state's future economic health required greater diversification of industry. Agriculture, still dominant in the rural areas of southern Michigan, remains an important element in the state's economy, and in northern Michigan, forestry and mining continue but generally at levels far below earlier boom periods. Output from manufactures peaked in 1999 at close to $84 billion, about 27% of gross state product, but in 2001, after an 11.85% fall from 2000 levels, manufacturing output accounted for only 23.1% of gross state product. By contrast, services of various sorts accounted for over 70% of total output in 2001. In 2002, Michigan lagged the national economy, and was not expected to recover in the short-term, while it manufacturing sector goes through restructuring.
Michigan's gross state product in 2001 was the 9th largest among the states at $320.5 billion, to which manufacturing contributed $73.9 billion; general services, $66.4 billion; trade, $54 billion; financial services, $50.3 billion; government, $35.2 billion, transportation and public utilities, $20.8 billion; and construction, $16 billion. The public sector constituted 11% of gross state product in 2001.