Modest economic gains hampered by slow population growth predicted for state
The chief economist for PNC Financial Services Group predicts modest economic growth in 2018 both for Wisconsin and the country overall.
But he says Wisconsin’s slow population growth is hampering economic development in the Badger State.
Gus Faucher spoke yesterday at the Wisconsin Bankers Association’s Economic Forecast Luncheon, held each year at the Alliant Energy Center in Madison.
He says national economic growth in 2018 should surpass last year’s average rate of 2.3 percent, rising near 2.7 percent.
“We do expect a little bit stronger growth, but over the longer term, growth will gradually return to its long-running level of about 2 percent or so,” Faucher said. “You have consumers in good shape, you have businesses highly profitable, you have continued economic growth, you have a boost to business investment and consumer spending with the personal income tax and corporate income tax cuts we’ve seen.”
He also predicted the national unemployment rate -- 4.1 percent, the lowest since 2000 -- will gradually decline to under 4 percent in 2018, bottoming out around 3.7 percent at the end of this year or the beginning of 2019. The Wisconsin rate is 3 percent.
As for Wisconsin GDP, he says “we expect to see continued gradual improvement in 2018,” though that’s expected to lag “a little bit behind the rest of the country.”
Faucher pointed out that in the current economic recovery and expansion period, job growth in Wisconsin has been “much weaker” than in the rest of the country.
“A lot of this has to do with Wisconsin’s demographic structure -- its older population,” he said. “It just doesn’t have the population growth and labor growth that other states in the U.S. have, so that’s weighing on job growth.”
Added Faucher: “I know the Foxconn plant is coming, but over the long run, what are businesses looking for? They are looking for skilled, young workers. If population growth in Wisconsin is well below the national average, then businesses aren’t going to be looking to locate in Wisconsin.”
One way for the state to buck this trend, he says, is to better capitalize on the UW System, which churns out research and work-ready graduates.
“Wisconsin needs to figure out how to take advantage of its resources, its demographics, and create that skilled young population that businesses are looking for, or else Wisconsin will continue to lag behind the United States over the long run,” he said.
Listen to an audio recording of the event here: http://soundcloud.com/wispolitics/wisconsin-bankers-association-economic-forecast-luncheon-2018
--By Alex Moe