MON AM News: Most bank CEOs expect state economy to weaken in next six months; Foxconn qualified for $8.6 million in tax credits in 2021

— Nearly three quarters of Wisconsin bank CEOs included in a recent survey expect the state’s economy to weaken in the next six months. 

The Wisconsin Bankers Association’s biannual Economic Conditions Survey found 72 percent of responding bank executives have a negative outlook on the state’s economy for the first half of 2023, while 28 percent expect no change. None of the respondents expect the state economy to improve over the next six months. 

And while 75 percent of these CEOs say Wisconsin’s economy is currently good or excellent, 87 percent expect a recession is likely or very likely to occur in the next six months. 

“With the likelihood of a recession in the coming year looming, banks are standing ready to help their customers and communities through,” WBA President and CEO Rose Oswald Poels said in a statement. 

Meanwhile, 51 percent of respondents expect inflation to fall in the next six months, while 24 percent expect it to rise and 25 percent expect it to stay the same. 

Bank CEOs pointed to high employment levels, strong consumer spending, the housing market and business growth in manufacturing, agriculture and service/tourism sectors as “economic bright spots” for the state. 

But they also highlighted a number of concerns including inflation, the likelihood of recession, rising interest rates leading to slowed loan growth and borrowers struggling to repay loans, the workforce shortage, cybersecurity challenges and a lack of child care options. 

The survey was conducted Nov. 15-30 with 71 respondents. 

See the full survey results: 

— Foxconn qualified for nearly $8.6 million in tax credits in 2021 after hitting jobs and capital investments targets in Gov. Tony Evers’ revised deal with the company, according to documents obtained through an open records request.

It is the second straight year Foxconn met the job requirements after regularly falling short of those marks under the original deal former Gov. Scott Walker signed with the company.

The state’s audit of Foxconn’s submission found 768 eligible employees, above the 747 needed in 2021 to qualify for the credits.

That qualified the company for $3.5 million in credits. It qualified for nearly $5.1 million more through its capital investments in the Racine County facility.

Foxconn fell short of the maximum capital investment it could qualify for in 2020. Still, the revised deal allows the company to retroactively qualify for credits for additional capital investments. That accounted for $245,666 of the capital investments credits.

Altogether, Foxconn paid $36.7 million in wages during 2021 to its employees covered by the incentive deal, according to the Wisconsin Economic Development Corp.

The company originally signed a deal with Walker that called for it to build what’s called a Gen 10.5 plant in Wisconsin that would make flat screens the size of garage doors while creating 13,000 jobs and investing $10 billion in the project. But that deal hit snags almost immediately as the company scaled back plans for the plant. 

Had the company met all of its goals over the lifetime of that deal, it could’ve qualified for some $3 billion in state tax incentives.

The revised deal Evers signed with the company significantly lowered job and capital investment targets, while dramatically reducing the potential tax credit Foxconn could get. Under the new contract, the company can receive $80 million in refundable state tax credits if it creates 1,451 jobs through the end of 2025 and invests $672 million.

The new contract was also revised to no longer include specific requirements on what it produces or manufactures, which is in line with other state incentive deals. The contract allows the company to earn the incentives so long as it meets the hiring and capital investment targets regardless of what Foxconn produces.

Read the verification letter to Foxconn from WEDC: 

Read the revised contract: 

— Small businesses in the state accessed about $789 million in loans supported by the U.S. Small Business Administration over the 12 months ending Sept. 30, according to the federal agency. 

The SBA notes that total was down from the record high $1 billion total from fiscal year 2021 for the state. But it’s still well above the typical pre-pandemic total of between $500 million and $600 million, the release shows. 

“These loan numbers indicate a healthy doubling down and belief by investors and community stakeholders that small businesses are essential for inclusive economic recovery and prosperity,” SBA Great Lakes Regional Administrator Geri Aglipay said in a statement. 

That total includes three loan categories: 504, 7(a) and microloans. 

The SBA’s 504 loan program provides long-term, fixed-interest capital for assets like real estate and equipment. A total of 387 of these loans were provided totaling $287.1 million, which is $10 million lower than the total for fiscal year 2021. The average 504 loan size was $857,000 in fiscal year 2022, down from $873,000 in the prior year. 

Meanwhile, the 7(a) loan program — the agency’s main program for small business loans — provided 958 loans for about $500 million in fiscal year 2022. That’s a decline from the previous year, when 1,325 loans totaling $774.6 million were provided, according to the SBA. Average loan size for this program fell from $584,000 to $522,000. 

And the agency’s six “microloan intermediaries” for the state provided 75 loans this year for a total of $1.5 million to small businesses in Wisconsin. The average loan size was about $20,000. In fiscal year 2021, 77 microloans totaling $1.9 million were provided, with an average loan size near $25,000. 

See more in the release: 

— More than half of the economic indicators tracked in the MMAC’s monthly report showed year-over-year improvement in October. 

While 12 of the 23 indicators showed improvement, MMAC Vice President of Economic Research Bret Mayborne said the “balance of positive and negative indicators has been relatively close” throughout most of this year. 

“This gives us some pause as to the long-term sustainability of this trend,” he said in the latest report from the Metropolitan Milwaukee Association of Commerce. 

He notes the metro area’s leisure and hospitality sector had its first annual job decline in 19 months in October, signaling its pandemic recovery phase is coming to an end. Jobs in this sector fell 1.8 percent to 71,800 for the month, the report shows. 

Meanwhile, six of the region’s 10 major industry sectors added jobs over the 12 months ending in October. This growth was led by professional and business services, with a 6.8 percent gain, and construction, mining and natural resources, with a 5.2 percent increase. 

See the full report: 

<br><b><i>Top headlines from the Health Care Report … </b></i>

— Gov. Tony Evers has announced that Health Services Secretary Karen Timberlake is leaving the administration, effective Jan. 2.

And three professors at UW-Madison have been named fellows of the National Academy of Inventors for their work in advancing cancer treatment and diagnostics, antibiotics research and prosthetics. 

<i>For more of the most relevant news on COVID-19, reports on groundbreaking health research in Wisconsin, links to top stories and more, sign up today for the free daily Health Care Report from and</i>

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<i>See these and other press releases: </i>

U.S. Small Business Administration: Helped Wisconsin small businesses access nearly $789 million to start, grow and expand in FY22

Better Business Bureau: Fall home maintenance – get ready for the winter