Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

Michigan inventionINDEX Scores – Last 12 months

The February 2026 score of 0.85 percent represents a continued softening in the Michigan inventionINDEX, maintaining the C- rating established at the start of the year. This figure is a slight decrease from the 0.89 percent recorded in January and sits significantly lower than the 1.49 percent peak observed in December 2025. Over the last six months, the index has experienced notable fluctuations, moving from a relatively stable range in the mid-one percent territory down to its current level. This recent trajectory suggests a cooling period for regional invention activity as the index struggles to regain the momentum seen during the final quarter of the previous year.

When examining the full 60-month historical spectrum, the current score resides in the lower quartile of recorded values. The index has demonstrated extreme volatility over the past five years, reaching a high of 3.09 percent in September 2023 and a low of -0.11 percent in July 2023. Compared to the robust performance of 2021 and late 2024, where scores frequently reached the A and B ranges, the current C- rating highlights a period of relative stagnation. While the index is currently avoiding the rare negative territory seen nearly three years ago, it remains far below the historical benchmarks that characterized the most prolific periods of innovation in the state.

Achieving a higher grade in the inventionINDEX, such as the A+ ratings seen in late 2023 and 2024, signals a flourishing ecosystem of intellectual property development and commercialization. Higher scores correlate with increased patent filings, enhanced entrepreneurial activity, and a more competitive economic landscape. These periods of growth often attract venture capital and foster high-tech job creation, which strengthens the broader economic foundation. A high rating serves as a leading indicator of future industrial progress, suggesting that the region is successfully translating research and development efforts into tangible economic assets.

Conversely, the persistence of lower scores and ratings like the current C- carries several negative implications for the regional economy. A low index score often points to a lack of new ideas entering the pipeline or a bottleneck in the transition from concept to market. If this trend continues, it may lead to reduced investor confidence and a potential brain drain as talent migrates to more innovative hubs. Furthermore, a sustained period of low invention activity can result in a loss of competitive advantage for local industries, making the region more vulnerable to economic shifts. Addressing these dips is crucial for maintaining long-term vitality and ensuring the state remains a viable center for technological advancement.

Discussion:

In February, the Michigan inventionINDEX scored a negative sentiment which was lower than the previous year’s average and underperformed the downward trend for the year. This is similar to the prior 12 months, which experienced a slight downward trend. 

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Swanson Reed’s Michigan office provides R&D tax credit consulting and advisory services to Detroit, Grand Rapids, Warren, Sterling Heights, Ann Arbor, Lansing, Flint, Dearborn, Livonia, Troy, Westland, Farmington Hills, Kalamazoo, Wyoming, Rochester Hills, Southfield, Taylor, Pontiac, St Clair Shores and Royal Oak.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

Who We Are:

Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years. 

Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs.  For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.