Rising Political Clarity Fuels Economic Optimism in Wisconsin
In reporting on the first Economic Outlook Survey conducted by Wisconsin Manufacturers and Commerce (WMC) following Governor Scott Walker’s 2010 election, the Milwaukee Journal Sentinel noted a “near complete reversal of sentiment” from the previous year. WMC’s 2012 survey also signaled optimism among the state’s business leaders, as have numerous external studies and rankings of Wisconsin’s business climate. Still, the state is not adding jobs at the rate we would all like to see. Why the disparity?
Governor Walker addressed this very question at the recent Wisconsin Economic Forecast Luncheon at the Monona Terrace in Madison, Wis.
Reflecting on a 2012 report from the U.S. Bureau of Labor Statistics showing Wisconsin ranked 42 out of 50 states in private sector job creation, Governor Walker noted, “For a lot of employers in the state, they said, we’re going to wait until after June 5th to figure out what’s happening in the state. We like the direction we’re headed, and we like the way things are going, but we’re not willing to go out on a limb to take on that loan, and add on that new equipment, to make that capital investment, to hire those new employees, until we know what the next step is.”
Political uncertainty at the national level also dampened local business sentiment. The First Business Economic Survey for Dane County, conducted between September and October 2012, showed that “a majority [of business leaders] believes that the current economic and political climate will continue to pose uncertainty on business performance.” St. Louis Federal Reserve Bank President and Chief Executive Officer James Bullard believes this uncertainty has been lifted.
Speaking at the Wisconsin Economic Forecast Luncheon, Bullard said, “It’s not that uncertainty has gone away completely—it certainly has not. But it’s not quite as pervasive as it was a year ago. One big [factor] is that the U.S. election was resolved. So, one way or the other, with election over, the uncertainty part of that is gone.”
In making the case for a projected 3.2 percent national economic growth rate for 2013, Bullard cited easing monetary policy and “reduced headwinds” as additional factors contributing to his optimism. While others argue the turnaround will take more time, Bullard sees the nation’s improving housing market and growth in emerging markets as signs that 2013 will be a productive year. The fact that the sovereign debt crisis in Europe has been less disruptive for global markets than some had feared also levels the recovery road, according to Bullard, who forecasts unemployment falling to 7 percent in 2013 and landing near 6 percent in 2014.
That’s good news for Wisconsin companies who appear poised to take advantage of an economic upswing. Sixty-five percent of respondents to the First Business Economic Survey of Milwaukee and Waukesha Counties, for example, said they expect their companies to perform better in 2013, compared with 61 percent who held that view at the start of 2012. Those expectations are up in Dane County (75 percent) and the Northeast Region (82.5 percent) as well. In some cases, the challenge will be to find workers with the skills necessary to meet evolving industry needs, a challenge that Governor Walker acknowledges and plans to address as a critical priority in the upcoming year.