Economic Outlook 2016

TUESDAY, FEBRUARY 23, 2016

FIFTH ANNUAL

ECONOMIC OUTLOOK

Today’s program is moderated by Dr. Taggert J. Brooks, Chair of the Department of Economics at UW - La Crosse.

Dr. Brooks reviews results from the annual regional economic outlook survey and provides comparisons to state and national trends, with an emphasis on business expansion.

Dr. Brooks is joined by a panel of experts on the factors related to business expansion in the Wausau region. This panel will answer questions about what is anticipated in 2016 and what can be done to improve them and grow the local economy.

Employment/Labor Market Marathon County Seasonally Adjusted Monthly Unemployment Rate 12

Actual data Seasonally adjusted data

There are signs of tightening in the local labor market as is evidenced by the low unemployment rate, despite the fact that the level of employment reported by establishments remains below the pre-recession peak.

9

6

3

1990

1995

2000

2005

2010

2015

Bureau of Labor Statistics

Marathon County: Employment 70,000

60,000

50,000

40,000

1985

1990

1995

2000

2005

2010

United States Census Bureau

Percentage of Organizations with Employment Ahead of the Previous Year

30

20

10

0 2011

2012

2013

2014

2015

Percentage of Organizations Who Rate Availability of Qualified Workers as Good or Excellent 40

30

20

10

0 2011

2012

2013

2014

2015

Job growth has been rather slow with fewer than 40% of organizations reporting an increase in employment over the previous year.

Despite slow growth in employment, local organizations have clearly experienced challenges when it comes to finding qualified workers. Fewer than 20% report the availability of qualified workers as Good or Excellent, down from over 40% immediately after the recession.

Business Survey Reports from the Wausau Region Chamber of Commerce

Business Sales, Profits and Capital Investment Percentage of Organizations with Gross Sales Ahead of the Previous Year Percentage of Organizations Planning Local Capital Expansion

40

20

20

0 2011

2012

2013

2014

2015

Percentage of Organizations with Profits Ahead of the Previous Year

10

0 2011

2012

2013

2014

2015

50

2014 was a better year for gross sales and profits relative to the previous year.

40

30

20

10

0 2011

2012

2013

2014

2015

2015 suggests fewer firms are ahead when compared to last year. Importantly, however, there has been a large increase in firms looking to reinvest in the community with plans for capital expansion by nearly 30 percent of the respondents.

Business Survey Reports from the Wausau Region Chamber of Commerce

Are the Following Business Factors (1) More Favorable, (5) Less Favorable or (3) About the Same as Factors Your Direct Competitors Face in Other Communities?

Availability of Credit

Availability of Skilled Labor

Availability of Unskilled Labor

Cost of Credit

Employee Health Care Costs

Environmental Regulations

Local Taxes

Technical Training Programs

Wage Rates

Worker Productivity

Worker Stability

60% 40% 20% 0%

60% 40% 20% 0%

60% 40% 20% 0%

60% 40% 20% 0%

1

2

3

4

5

1

2

3

4

5

This series of questions from the recent survey highlights areas where local businesses think they have advantages and disadvantages over their competitors. Responses of (1) and (2) suggest more favorable conditions in the local community relative to their competitors, while (4) and (5) suggest less favorable conditions for each factor.

Organizations identify challenges in the areas of availability of skilled labor and, to a lesser extent, unskilled labor. Employee health care costs and local taxes are also less favorable than in competitor’s communities.

Areas where the local community appears more favorable to organizations relative to their competitors are in wage rates, technical training programs, worker productivity and the availability of credit.

Business Survey Reports from the Wausau Region Chamber of Commerce

Marathon County: Number of Establishments 3,600

3,400

The number of establishments in the county continues to fall, but with rising employment at these firms beginning after 2010, it implies establishment size has been increasing.

3,200

3,000

2,800

1985

1990

1995

2000

2005

2010

Marathon County: Small Establishments (<10 employees) as Percentage of all Establishments The proportion of small establishments as a percentage of all establishments has been falling since the mid-1980s.

74%

72%

70%

68%

United States Census Bureau 1985

1990

1995

2000

2005

2010

Consumer Sentiment and Wages 120

Consumer Sentiment Index

90

Region 60

Marathon County National

30

0 Consumer Sentiment

Current Conditions

Expectations

Comparing regional consumer sentiment to national trends suggests Marathon County is running ahead of the national sentiment in all categories - overall, current and future expectations.

University of Michigan Consumer Sentiment Survey

Marathon County: Average Annual Wages Part of the explanation might lie with the fact that average annual wages have generally increased in recent years after pulling back in the recession.

Thousands

35

30

25

United States Census Bureau 20

1985

1990

1995

2000

2005

2010

Housing Market

Median Home Prices: Marathon County Actual data Smoothing filter applied

The housing market continues its slow pace of recovery. The liquidity in the market as measured by the number of sales reported by the Wisconsin Relators Association has returned to levels seen at the start of the recession, while the median sales price continues to rise, searching for the previous peak.

$140,000

$120,000

$100,000

2008

2010

2012

2014

2016

Number of Home Sales Per Month: Marathon County 160

120

80

40

Wisconsin Realtors Association 2008

2010

2012

2014

2016

Regional Airport Enplanements Index CWA

EAU

LSE

MSN

MSP

RST

120

100

80

120

100

80

2000

2005

2010

2000

2005

2010

2000

2005

2010

Central Wisconsin Airport (CWA) along with regional airports in La Crosse (LSE) and Rochester, MN (RST) have struggled to maintain the number of passengers they had in 2000. Minneapolis (MSP) and Eau Claire (EAU) have seen modest gains and Madison (MSN) has seen much larger gains. While people travel for more than business reasons, and supply issues, such as the number of carriers and times of flights can have a dramatic impact on these data, they are still possibly indicative of general economic activity.

Federal Aviation Administration

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