WisBusiness: Expert sees room to improve Wisconsin’s long-term economic prospects

By Patricia Simms

For WisBusiness.com

Wisconsin’s economy is faring pretty well in the short term, but the long-term outlook looks shakier.

While Gov. Scott Walker says the number of new jobs in the private sector from January through April reached 25,000 and the prognosis for the state’s economy is good, one home-grown economist says Wisconsin’s long-term prospects look lean.

At the Wisconsin Real Estate and Economic Outlook Conference at the Fluno Center in Madison Thursday, University of Wisconsin Foundation president and CEO Michael Knetter said Wisconsin has been swimming too slowly as global tides shift to technology-based economies.

“Our economic growth outlook as a state is not great in terms of the long-term fundamentals,” Knetter, former dean of the Wisconsin School of Business, told WisBusiness.com after his speech. “The knowledge-intensive industries can locate anywhere people want to live, unlike the manufacturing industries of the last century that located near the bountiful raw material inputs found in the upper Midwest.”

Wisconsin has fared relatively well in the current cycle, at least partly because of less exposure to the harrowing housing bubble, he said.

But Knetter said poor weather, higher taxes, and transport difficulties reaching national and international markets create headwinds for Wisconsin as a location.

“Nice people may not be enough to overcome that,” he said. “But getting our fiscal position strengthened so we can provide good education into the future can give us an edge.” Wisconsin can also hope that manufacturing and agriculture, which have always formed the state’s economic backbone, rebound, he said.

Thursday, Walker said he’s seeing new job growth, particularly in mid-sized and small-sized manufacturers in Wisconsin and in Illinois, where the state has just boosted corporate taxes.

Controversy has raged over the past few months over Walker’s efforts to curb collective bargaining for public employees, give the UW-Madison control over its own spending and policies and cut government services.

Even as protesters pounded on the doors of the auditorium where he was speaking, Walker said the benefits of what he’s doing haven’t been realized yet — about $1.27 billion in budget cuts over the next two years will yet produce $1.44 billion worth of savings, he said.

“Our economy is improving, but we have a long ways to go to make sure the economy gets better so more people are put back to work in this state,” Walker said.

Knetter said the United States will remain the strongest developed economy even if it grows more slowly than others. The country still has an abundance of land, a large work force and access to capital. “This is a very fortunate country,” he said. “It’s pretty hard to screw up, but it could be done.”

Knetter’s advice for Wisconsin’s leaders? Improve the tax climate and incentives for business, improve transportation and education, and focus on regional strategies that emphasize local strengths.