Wisconsin's Economy Remains Strong,
But Optimism Wanes
Tariffs, Healthcare Costs and Workforce Create Concern
MADISON – Wisconsin’s economy remains strong, but state business leaders are a little less optimistic heading into 2019 than a year ago, according to the latest semi-annual economic survey conducted by Wisconsin Manufacturers & Commerce (WMC), the state’s largest business group.
Eighty-four percent of the 203 business executives surveyed in December rate the Wisconsin economy as strong or very strong, up from 80 percent in June and 70 percent a year ago. Eighty-one percent rate the U.S. economy as strong or very strong, which is unchanged from six months ago.
Wisconsin business leaders also continue to like the direction of the U.S. economy, despite some concerns about tariffs, health care costs and labor availability. Eighty-three percent said the U.S. is headed in the right direction, down from 86 percent in June.
At the state-level, the right-track/wrong-track number dipped to 68 percent. It was 89 percent in June and a year ago. While 88 percent of state executives said their business was profitable in the last six months and 92 percent project profitability in the first six months of 2019, fewer said they will experience “good growth” next year.
Similarly, six months ago 21 percent said the Wisconsin economy will see good growth. That number dropped to 14 percent today, with 57 percent saying growth will be moderate and 22 percent saying it will be flat, exactly the same percentages as six month ago.
Fifty-five percent of those surveyed plan to hire in the next six months, down from 60 percent six months ago, which may explain why the number of business leaders who said they are having trouble finding workers has dropped in the last year. Seventy-four percent say they can’t find workers, down from 76 percent in June and 80 percent a year ago.
On the face of it, a lower number of businesses that are not having trouble finding workers looks like a positive sign. But it might also be an early indicator that the economy is slowing or that businesses are so frustrated by the labor shortage that they stopped actively looking for workers, according to Kurt Bauer, WMC’s president/CEO.
Still, the labor shortage continues to be the top public policy issue facing Wisconsin, according to businesspeople. Fifty percent of respondents rank it number one. Heath care is again the number two concern (18 percent) and high taxes is third (9 percent).
In other findings:
- President Donald Trump’s approval rating was unchanged at 79% from the survey conducted in June. WMC did not ask a question about Scott Walker’s or Tony Evers’ approval rating in this survey.
- 70% either strongly or somewhat support the new United States Mexico Canada Trade Agreement. Previous surveys had shown a majority supported renegotiating the North American Free Trade Agreement.
- In June, 45% of survey respondents supported the Trump Administration’s proposed tariffs, but that was before they took effect and before the retaliatory tariffs. 37% now say the tariffs have had a negative effect on their business to just 5% who say the effect has been positive. 50.7% said the tariffs had no effect. In the open-ended question about tariffs, the consensus was that they are driving up the cost of materials, particularly steel and aluminum.
- 66% say the federal tax reform, enacted in 2018, is having a positive impact, while 2% say it is a negative. 23% said the reform’s impact was neutral.
- 72% support immigration reform to allow more foreign workers of all skill levels to work legally in the U.S.
- 66% strongly or somewhat oppose legalization of marijuana for recreational purposes.
- As noted above, the survey shows that Wisconsin businesses continue to struggle with the high cost of health care and 69% percent said that higher premiums are being passed on to their employees in the form of higher contributions. 21% said they have reduced benefits offered to their employees because of health care costs.