Several economic forecasts and other data indicate that Wisconsin’s economy is likely to keep on rolling along in 2020, and that’s good news for President Donald Trump.
In a December survey of the state’s bankers, for instance, almost 80% rated Wisconsin’s current economy as “good” with nearly the same percentage predicting that the Badger state economy will stay the same in 2020.
“Low unemployment, strong manufacturing, low interest rates, a diverse economic base, and strong consumer confidence were some of the factors cited as to why the economy was doing so well,” the survey by the Wisconsin Bankers Association (WBA) stated. “Bankers cited the agricultural section of the economy and a lack of available employees when hiring as negative factors creating some economic headwinds for Wisconsin.”
Still, 79% of the Wisconsin bank CEOs and presidents surveyed said the economy was good while another 16% weighed in with “excellent.” In a follow-up question, the survey stated, 72% predicted the Wisconsin economy will stay the same, with 23% saying it will improve.
“As predicted in our last survey, 2019 was a strong year for Wisconsin’s economy and lending activity,” Rose Oswald Poels, WBA president and CEO, said. “It’s very encouraging to see most bankers believe 2020 will continue that positive trend. Bankers are the best barometers of the economy as they see all segments of every marketplace. They work together with their communities and are the first to see and understand Wisconsin’s economic trends due to their customers’ activities. In turn, our members use that information to help their communities prosper.”
In addition, according to the survey, loan demand for business, commercial real estate, and residential real estate are good with the 2020 forecast saying those levels will stay the same in the new year. The exception was agricultural loans, with 51% saying levels are fair and 33% saying poor.
The prediction by 56% of CEOs and presidents was that levels would stay consistent in 2020.
Finally, the survey stated, businesses will hire more employees, according to 45% of the respondents, while 54% said businesses will maintain their current staffing levels.
Another survey by Manpower Group, which conducts a quarterly survey of U.S. employers to find out if they plan to grow, downsize, or maintain their staffing levels, says the net employment outlook is strong for Wisconsin.
That data shows that in Wisconsin 28% of employers surveyed plan to hire more employees, and 6 percent said they plan to downsize, leading to a net employment outlook of 22%. That’s higher than the national net outlook of 19%.
Meanwhile actual numbers from the latest Department of Workforce Development (DWD report show that Wisconsin’s unemployment rate and labor force participation rate remained unchanged in November.
The U.S. Bureau of Labor Statistics (BLS) preliminary employment estimates for the month of November put Wisconsin’s unemployment rate at 3.3%, while the labor force participation rate also remained unchanged at 67.1%. The data also showed that Wisconsin has added 9,900 private-sector jobs from November 2018 to November 2019.
More specifically, Wisconsin’s labor force participation rate in November was 67.1%, 3.9% higher than the national rate of 63.2%. Wisconsin’s unemployment rate in November was 3.3%, or 0.2% lower than the national rate of 3.5%.
Wisconsin added 9,900 private-sector and 6,500 total non-farm jobs from November 2018 to November 2019, the report stated, but, from October 2019 to November 2019, Wisconsin’s private-sector and total non-farm jobs declined by 1,200 and 2,900 respectively.
“Wisconsin’s unemployment rate remained steady at 3.3% last month, and we look forward to working with our statewide partners over the next year to continue to create workforce initiatives that increase wages and encourage family-supporting jobs,” said DWD secretary-designee Caleb Frostman.
Speaking of wages, across the nation wages have moved higher, another positive sign for the economy, writes James Pethokoukis of the American Enterprise Institute (AEI).
“The prime-age employment rate — we’re talking about workers 25 to 54 — is now back above where it was at the start of the Great Recession,” Pethokoukis wrote recently on the AEI blog. “Wages are growing, too. Average hourly earnings for all employees have increased by 3.1% over the past year, with earnings for production and nonsupervisory employees up 3.7%. Not bad given low inflation and, unfortunately, low productivity growth.”
Pethokoukis said the most encouraging data point is how the lowest-paid workers continue to experience faster wage growth than workers overall, which wasn’t the case in the first years of the post-Great Recession recovery.
“The obvious explanation here is that we’re seeing the effect of a long expansion and an ever-tightening labor market,” he wrote, observing that a stronger labor market tends to reduce wage inequality and narrow gaps between groups.
Pethokoukis dismissed a contention by Democrats who suggest the higher wages are due to higher state minimum wages. In doing so he cited Atlanta Fed policy adviser John Robertson, who said the relative median wage rose in the 28 states that increased their minimum wage, as would be expected (23 with new minimum wage levels, and five with increases legislated before 2014).
But, Robertson observed, that doesn’t mean the wages rose because of the higher minimum wages.
“Interestingly, though, even in the ‘no increase’ states, the relative median wage has improved, suggesting that the increased tightness of labor markets, or some other factor than hikes in state minimum wages, is playing a role in pushing up the pay for those in lower-wage jobs,” Robertson wrote. “(T)he good news is that there is scope to continue to build on the gains from the long and ongoing expansion for workers at the bottom end of the wage distribution.”
Political issues aside, the positive track of the economy and the confidence of many employers that it will continue, with both sustained low unemployment and higher wages, is good news for Wisconsin in 2020, if the expectations hold.
Richard Moore is the author of the forthcoming “Storyfinding: From the Journey to the Story” and can be reached at richardmoorebooks.com.