By M.D. Kittle
MADISON — While President Joe Biden and Gov. Tony Evers may try to sell voters on a delusional message about the “booming” economy and that a recession “isn’t inevitable,” Wisconsin businesses don’t share that optimism, according to a new survey.
More than two-thirds (71%) of businesses questioned believe Wisconsin’s economy is headed for a recession within the next 12 months, according to the latest Wisconsin Employer Survey, conducted by Wisconsin Manufacturers & Commerce. Four in 10 of respondents expect a significant downturn by the end of the year.
“Businesses continue to be hit hard by ever-increasing costs and perpetual supply chain challenges,” said WMC President & CEO Kurt R. Bauer. “These issues are driving Wisconsin employers to be deeply concerned about the prospect of a slowing economy.”
When asked to rate the Wisconsin economy, 44% of respondents said it was strong – a 14 point drop from a year ago. Another 47% rated the state’s economy as moderate and 9% said it was weak. The national economy fared even worse. Only 26% of Wisconsin businesses in the WMC survey believe the U.S. economy is strong, while half rate it as moderate and 27% say it is weak.
That’s a different take than the rosy views shared by the political executives running Wisconsin and the United States.
Despite soaring inflation not seen in more than 40 years, a supply chain crisis and retirement accounts devoured by bear markets on Wall Street, Biden insists a recession “is not inevitable.” That was the talking point late last month as average gas prices nationally topped $5 a gallon.
“People are really, really down. Their need for mental health in America has skyrocketed because people have seen everything upset,” Biden said, as his administration and Democrat allies were pushing the recession is not inevitable talking point. “Everything they’ve counted on upset. But most of it’s the consequence of what happened, what happened as a consequence of the Covid-19 crisis.”
Biden and his team repeatedly have insisted that the U.S. economy is in a stronger position than “any other nation in the world to overcome this inflation.”
Tell that to the average American family forced to fork over an extra $460 a month to cover the higher cost of just about everything.
Wisconsin businesses aren’t buying the political rhetoric. They’re seeing the trouble on the ground.
A year ago, 84% of Wisconsin employers said the state economy would grow. That number dropped to 65% in the Winter 2022 survey, and it sits at just 45 percent in the most recent WMC survey. A majority of respondents – 55 percent – believe Wisconsin’s economy will remain flat or decline over the next six months.
Sentiment is more pessimistic on the national economy. Three in 10 companies believe the U.S. economy will grow over the next six months, and a plurality – 39 percent – think it will decline, according to the employer survey. Just six months ago, only 12 percent of Wisconsin employers thought the national economy would contract.
Campaigning for re-election, Evers insists Wisconsin’s economy is “booming,” with low unemployment and record state budget surpluses. But as the governor boasts about robust job creation (much of which is really just people returning to work after lockdowns, local restrictions and very generous unemployment benefits Evers refused to end), the Badger State ranks near the bottom in job growth over the past year. Wisconsin ranked 49th in total job growth (May 2021 to May 2022), a minuscule 1.9% rate, or 54,500 jobs added to the economy. Only Kansas (1.3%) recorded slower growth.
The state’s hefty budget surplus projection is in large part the result of massive amounts of federal COVID aid — taxpayer money — pumped into the states and the economy. All that spending is a chief reason for skyrocketing prices.
And Wisconsin businesses are very concerned about inflation. Two-thirds of employers in the state have seen their costs go up by more than 10% in the last six months, according to WMC’s survey. That’s 20 points higher than just six months ago when less than half of all respondents had seen double-digit price hikes.
“With businesses paying even more, consumers are next up to be hit with these higher costs,” Bauer said.
The survey also found that roughly half of businesses have seen energy costs go up by more than 10% and a third have seen health care costs go up by the same amount. Six in 10 businesses said it would not be until 2024 or later until inflation is reined in. Fifty-four percent predicted it would take just as long to fix the current supply chain issues plaguing the economy.
The Wisconsin Employer Survey is conducted twice a year by WMC, the combined state chamber and manufacturers association. The assessment provides a snapshot of where Wisconsin’s employers stand on a number of important issues and outlines their economic outlook for both Wisconsin and the United States. In its latest edition, WMC surveyed 216 employers that make up a representative sample of its membership. Businesses of all sizes, industries and geographic locations in Wisconsin participated.