By Brian E. Clark
WisBusiness.com
MADISON – As economic growth weakens, Wisconsin personal income growth
will slow to 3.8 percent this year and 4 percent next year, down from
gains of near 5.3 percent in 2006 and about the same amount in 2007,
according to the Wisconsin Quarterly Economic Outlook.
The report, issued by the state Department of Revenue, predicted
Wisconsin’s economy will continue to outperform many of its Midwestern
neighbors and pick up after 2009. At that point, personal income growth
should expand by 4.8 percent in 2010 and 5.3 percent in 2011.
Also during the next two years, employment is expected to remain
relatively flat, increasing by 0.5 percent this year and 0.6 percent in
2009 for a net gain of 15,000 jobs, the report said. As the economy
recovers nearing 2010, Badger State employment growth should rise above
1 percent.
Though the job gains are modest, Dennis Winters, director of the Office
of Economic Advisors at the state’s Department of Workforce
Development, said he is pleased they will be in positive territory.
“Given the economic conditions, I’d say that’s pretty good,” he said.
“I think we are going to being doing better than some other places in
the country.
“Michigan, for example, will still be on the down track, as will Ohio.
And states like Florida, California and Nevada are going to continue to
feel the impact of the housing decline.”
The DOR report said the Wisconsin economy will not be as severely hit
as other states that experienced strong speculative behavior in their
housing sectors.
“However, it cannot be fully insulated given that the downturn in the
housing market is spreading beyond housing,” the report warned.
Winters said he hopes Wisconsin’s economy will receive a boost from an
estimated $2.1 billion in federal economic stimulus payments that
residents should receive later this year.
A total of 2.4 million federal rebates, averaging $877, will be issued
in the Badger State, the report said, and that should boost consumer
spending in the third and fourth quarters of this year.
“That money should help, but it all depends on what people do with it,”
he said. “If they spend it, it will have a short-term impact.
“Then again, they could just pay off bills. That won’t benefit the
economy in the short term, but it’s a good thing over time.
“It will be different for each person and family,” mused Winters, who
said he will probably put most of his payment in a college fund for his
children.
Bruce Bittles, Robert W. Baird’s chief economist, was less optimistic
about the effect of the stimulus payments.
“Historically, they don’t tend to work out the way politicians expect
them to, especially if they go into savings accounts or pay off debts,”
he said.
“The balance will be spent, but if people go for consumer goods that
are made overseas, they will mostly benefit manufacturers in China and
India.
“I don’t think it will have much of an effect on the economy,” he said.
Nor was Bittles impressed by the predicted 15,000 net gain in jobs over
the next two years.
“That’s a pretty slim gain,” he said. “I’m afraid that even if the
economy doesn’t fall into a recession, we will remain in a slow growth
mode for some time.
“A 0.5 percent increase in jobs is certainly lackluster, but I guess it
simply reflects the national scene,” he said.
