Tag Archive for: Economic Forecast

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5 Steps to Grow Your Bank’s Community Relationships in 2023!

With interest rates on the rise and a possible recession on the way, your business customers and community leaders are probably looking for some insight on the economy and expectations for 2023 and beyond. WBA has put together a virtual forum that will bring St. Louis Federal Reserve Bank President James Bullard and PNC Economist Gus Faucher right into your bank via livestream to provide their economic outlook and address audience questions. The virtual forum will take place live on Thursday, January 12 from 10:30 a.m. – Noon CT. Those who are registered will also receive access to the recording for 14 days following the live presentation.

Step 1: Make a List

Put together a list of your business customers and local community and business leaders to invite to join your bank’s team to watch the January 12 Midwest Economic Forecast Forum. Invite them to join you that morning to network with your staff and other local leaders and enjoy lunch together after the live webinar.

Step 2: Reserve a Room

Be sure to reserve a meeting room, perhaps your boardroom, training room, or a community room, to host your guests. Make sure that you have the right AV in place to be able to project or display the Zoom webinar and have speakers in place for the sound. A test run is always a good idea!

Step 3: Register Online

Register at www.wisbank.com/econ for a group registration, which includes access for up to 10 different locations. If you have customers who are unable to join you in person, or wish to watch the recording afterwards, add them as your group guests so they get the link directly in their email inbox!

Step 4: Order Lunch

Once you know how many guests to expect, order lunch to be delivered at Noon from a local caterer or restaurant! There’s no better way to support your community than supporting a local business! Don’t forget to order dessert!

Step 5: Host Your Guests!

As you prepare for your guests to arrive, consider having name badges prepared (be sure to have some blank ones available too), brew some coffee, and get some other beverages together. Designate staff to welcome your guests and direct them to the meeting room. Watch the live webinar together and then enjoy lunch while hosting a great networking event!

If you have questions or need assistance with registration, please contact the WBA Education team via email.

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Bank CEO Economic Forecast: Cloudy with a Chance of Recession

WBA Releases Results of Bank CEO Economic Conditions Survey

In the Wisconsin Bankers Association’s biannual Economic Conditions Survey of Wisconsin bank CEOs, three quarters of respondents rated Wisconsin’s current economic health as “excellent” or “good.” This continues a trend from the mid-year 2022 survey, when 71% of survey respondents gave “excellent” or “good” ratings. None of the Wisconsin bank CEOs who completed the most recent survey foresee major economic improvement in the first half of 2023 — 28% predict that the economy will stay the same and 72% predict it will weaken in the next six months.

“Because they are in tune with the financial circumstances of businesses and families in their areas, bank CEOs are experts who can apply a lot of context to their economic perspective,” said WBA President and CEO Rose Oswald Poels. “With the likelihood of a recession in the coming year looming, banks are standing ready to help their customers and communities through.“ 

 
Among the economic bright spots cited by CEOs in the survey were high employment, continued spending by consumers, the housing market, and business growth — particularly in manufacturing, agriculture, and service/tourism. Top economic concerns reported by bank CEOs were inflation, the likelihood of recession, rising interest rates/slowed loan growth/reduced ability of borrowers to repay loans, business staffing, cybersecurity/fraud, and inability to access childcare.

The end-of-year 2022 survey was conducted November 15–30 with 71 respondents. Sums may not equal 100 percent due to rounding. Below is a breakdown of the survey questions and responses.

Wisconsin Bank CEO Economic Conditions Survey Results 

How would you rate the current health of the Wisconsin economy?  End-of-Year 2022  Mid-Year 2022  End-of-Year 2021 
Excellent  6%  7%  6% 
Good  69%  64%  73% 
Fair  24%  29%  20% 
Poor  1%  0%  1% 
        
In the next six months, do you expect the Wisconsin economy to…       
Grow  0%  2%  21% 
Weaken  72%  63%  15% 
Stay the same  28%  36%  64% 
        
Over the next six months, do you expect inflation to…       
Rise  24%  50%  – 
Fall  51%  22%  – 
Stay about the same  25%  28%  – 
       
How likely would you say a recession is in the next six months?       
Very unlikely  0%  4%  – 
Unlikely  3%  16%  – 
Neutral  10%  20%  – 
Likely  62%  45%  – 
Very likely  25%  16%  – 
       
Rate the current demand in the following categories:       
Business Loans       
Excellent  3%  2%  9% 
Good  44%  48%  48% 
Fair  46%  48%  39% 
Poor  7%  2%  5% 
        
Commercial Real Estate Loans       
Excellent  6%  7%  11% 
Good  34%  52%  44% 
Fair  53%  36%  41% 
Poor  7%  5%  4% 
        
Residential Real Estate Loans       
Excellent  4%  2%  25% 
Good  7%  20%  48% 
Fair  33%  50%  24% 
Poor  55%  29%  3% 
        
Agricultural Loans       
Excellent  3%  2%  1% 
Good  23%  37%  22% 
Fair  60%  51%  58% 
Poor  13%  10%  18% 
        
Deposit       
Excellent  3%  5%  – 
Good  44%  55%  – 
Fair  44%  38%  – 
Poor  9%  2%  – 
       
In the next six months, do you anticipate the demand for the following categories will…       
Business Loans       
Grow  8%  11%  28% 
Weaken  56%  48%  14% 
Stay the same  35%  41%  59% 
        
Commercial Real Estate Loans       
Grow  1%  13%  24% 
Weaken  63%  48%  21% 
Stay the same  35%  39%  55% 
        
Residential Real Estate Loans       
Grow  6%  4%  11% 
Weaken  54%  63%  56% 
Stay the same  41%  34%  33% 
        
Agricultural Loans       
Grow  15%  6%  15% 
Weaken  38%  31%  14% 
Stay the same  48%  63%  71% 
        
Deposit       
Grow  13%  11%  – 
Weaken  38%  36%  – 
Stay the same  49%  53%  – 
       
In the next six months, are the businesses in your bank’s market area likely to…       
Hire employees  17%  31%  68% 
Maintain current staffing levels  71%  61%  33% 
Lay off employees  11%  7%  0% 
        
In the next six months, is your bank likely to…       
Hire employees  23%  34%  55% 
Maintain current staffing levels  73%  63%  43% 
Lay off employees  4%  4%  3% 
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Association Update: Economic Resources Available to All Bankers

By Daryll Lund

As the last several years have proven — it can be difficult to predict exactly what the year ahead has in store. Between rising inflation, growing mortgage rates, and consumer uncertainty, communities throughout Wisconsin are looking to their local bankers for guidance and tools to prepare.

In an effort to stay one step ahead, educated, and ready to assist when called upon, it is critical that all bankers continue to lean on their peers and industry experts for reliable information and outlooks. Events such as the annual Midwest Economic Forecast Forum — presented by the Wisconsin Bankers Association (WBA) in partnership with other state banking associations — provides bankers just the setting to become acquainted with tomorrow’s economic predictions.

This year’s virtual forum will feature James Bullard, president and CEO of the Federal Reserve Bank of St. Louis, and Augustine (Gus) Faucher, chief economist at the PNC Financial Services Group. During the two-and-half- hour event, the two experts will discuss their economic insights and expectations for 2023 and beyond specifically for bankers of all levels, board members, and business clients.

Additionally, WBA’s charitable arm — the Wisconsin Bankers Foundation (WBF) — provides quarterly economic updates specifically tailored to Wisconsin bankers on banconomics.com. Compiled by UFS, Banconomics features essential economic data, research, and reports community bankers can utilize to support public and private decision-making. These quarterly reports are designed to be shared with staff, bank directors, and shareholders to assist the bank in tracking benchmarks and creating peer comparisons — undoubtedly a valuable tool to remain informed on our industry throughout the year.

While uncertainty in our daily lives remains ever present, there is no shortage of tools for bankers to gain valuable insights on economic changes as they occur. Our Association is committed to ensuring bankers in Wisconsin and throughout the Midwest not only have access to the knowledge and resources best suited to guide our community members, but for the continued prosperity throughout our industry.

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Midwest Economic Forecast Forum Virtual on January 12

By Daniel J. Peterson

As we quickly approach the end of another calendar year, I am reminded of last year when the residual effects of the COVID-19 pandemic still cast uncertainty into the new year. Though many of us can agree that the pandemic no longer directly impacts us in the ways seen previously, it has continued to force record-level inflation and recessionary fears onto the wallet of every Wisconsinite.

As our neighbors look to bankers as experts on both the economy and communities they serve, it is important that we as banking leaders take the opportunity to interpret and pass on the economic data and trends that we will likely see into 2023.

Annually, the Wisconsin Bankers Association (WBA), in partnership with several other Midwestern banking associations, hosts a virtual Midwest Economic Forecast Forum. This forum is focused specifically on providing bankers with the chance to hear from nationally renowned experts on the challenges expected to impact our industry in the new year and also opportunities that are in store.

This year’s forum will once again be held virtually and provide individual or group rates to banks interested in inviting staff, business customers, directors, and others to join in on the viewing. Mark your calendars now for January 12, 2023 from 10:30 a.m.–noon CT and visit wisbank.com/econ to register.

This year, bankers will gain an economic outlook from James Bullard, president of the Federal Reserve Bank of St. Louis and member of the Federal Open Market Committee (FOMC), as well as Gus Faucher, senior vice president and chief economist at the PNC Financial Services Group.

The last several years have certainly proven it is difficult to predict what is to come. As uncertainty continues to surround many aspects of our economy, it is necessary for the continued prosperity of our banks and community members that we look ahead. Without doubt, 2023 will create challenges and opportunities and prove to be a very unique year for many industries. The interest rate environment will cause many to pause and reevaluate, with fears of a recession on the horizon. Bankers will need to stay tuned in to the economic environment as we navigate through the next year.

I look forward to the discussion on these topics at the Midwest Economic Forecast Forum and hope many of you will join us.

Peterson is president and CEO of The Stephenson National Bank & Trust, Marinette, and the 2022–2023 WBA Chair.

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Wisconsin Bank CEOs Weigh in on Inflation and Possibility of Recession

WBA Releases Results of Bank CEO Economic Conditions Survey

In the Wisconsin Bankers Association’s biannual Economic Conditions Survey of Wisconsin bank CEOs, 71% of respondents rated Wisconsin’s current economic health as “excellent” or “good.” This marks a decline from the mid-year 2021 survey, when 91% of survey respondents gave “excellent” or “good” ratings. Nearly all (over 98%) of the Wisconsin bank CEOs who completed the most recent survey predict that the economy will stay the same or weaken in the next six months. 

“Wisconsin bank CEOs have a unique vantage point in that they are both financial experts and highly involved individuals in their local communities,” said WBA President and CEO Rose Oswald Poels. “While the economy remains relatively stable, bankers are keeping a close eye on important indicators and stand ready to support their customers through possible economic challenges over the coming months.“ 

Among the economic bright spots cited by bank CEOs in the survey were strong tourism, construction, manufacturing, and agricultural industries. Survey results indicate that the hiring market and real estate market are cooling down. Top economic concerns reported by bank CEOs were inflation, cost of living/childcare/education, rising interest rates, oil and gas prices, staffing shortages, and the war in Ukraine.

The mid–year 2022 survey was conducted May 24–June 10 with 56 respondents. Sums may not equal 100 percent due to rounding. Below is a breakdown of the survey questions and responses.

Wisconsin Bank CEO Economic Conditions Survey Results
How would you rate the current health of the Wisconsin economy. . .  Mid-Year 2022  End-of-Year 2021  Mid-Year 2021 
Excellent  7%  6%  15% 
Good  64%  73%  76% 
Fair  29%  20%  10% 
Poor  0%  1%  0% 
         
In the next six months, do you expect the Wisconsin economy to. . .        
Grow  2%  21%  48% 
Weaken  63%  15%  39% 
Stay the same  36%  64%  13% 
         
Over the next six months, do you expect inflation to. . .       
Rise  50%  –  – 
Fall  22%  –  – 
Stay about the same  28%  –  – 
       
How likely would you say a recession is in the next six months?       
Very unlikely  4%  –  – 
Unlikely  16%  –  – 
Neutral  20%  –  – 
Likely  45%  –  – 
Very likely  16%  –  – 
       
Rate the current demand in the following categories:        
Business Loans        
Excellent  2%  9%  10% 
Good  48%  48%  30% 
Fair  48%  39%  52% 
Poor  2%  5%  8% 
         
Commercial Real Estate Loans        
Excellent  7%  11%  13% 
Good  52%  44%  44% 
Fair  36%  41%  33% 
Poor  5%  4%  10% 
         
Residential Real Estate Loans        
Excellent  2%  25%  40% 
Good  20%  48%  48% 
Fair  50%  24%  12% 
Poor  29%  3%  0% 
         
Agricultural Loans        
Excellent  2%  1%  2% 
Good  37%  22%  34% 
Fair  51%  58%  56% 
Poor  10%  18%  8% 
         
Deposit       
Excellent  5%  –  – 
Good  55%  –  – 
Fair  38%  –  – 
Poor  2%  –  – 
       
In the next six months, do you anticipate the demand for the following categories will. . .        
Business Loans        
Grow  11%  28%  43% 
Weaken  48%  14%  7% 
Stay the same  41%  59%  51% 
         
Commercial Real Estate Loans        
Grow  13%  24%  31% 
Weaken  48%  21%  8% 
Stay the same  39%  55%  31% 
         
Residential Real Estate Loans        
Grow  4%  11%  14% 
Weaken  63%  56%  41% 
Stay the same  34%  33%  46% 
         
Agricultural Loans        
Grow  6%  15%  18% 
Weaken  31%  14%  6% 
Stay the same  63%  71%  76% 
         
Deposit       
Grow  11%  –  – 
Weaken  36%  –  – 
Stay the same  53%  –  – 
       
In the next six months, are the businesses in your bank’s market area likely to. . .        
Hire employees  31%  68%  82% 
Maintain current staffing levels  61%  33%  15% 
Lay off employees  7%  0%  3% 
         
In the next six months, is your bank likely to. . .        
Hire employees  34%  55%  48% 
Maintain current staffing levels  63%  43%  45% 
Lay off employees  4%  3%  6% 
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Inflation, Global Supply Chains, and Labor Top the List of 2022 Economic Trends to Watch

Minneapolis Fed President Neel Kashkari and Economist Dr. David Kohl Headline Midwest Economic Forecast Forum 

By Cassandra Krause, Wisconsin Bankers Association 

On January 4, the Wisconsin Bankers Association hosted the 2022 Midwest Economic Forecast Forum in partnership with the Illinois Bankers Association, Michigan Bankers Association, Minnesota Bankers Association, Montana Bankers Association, and South Dakota Bankers Association. The event kicked off with a presentation by Minneapolis Federal Reserve Bank President and CEO Neel Kashkari. His presentation was followed by a town hall-style Q & A, moderated by WBA President and CEO Rose Oswald Poels. The conversation included topics such as the conditions in sectors like manufacturing, agriculture, and construction; the Fed’s dual mandate from Congress; supply chains; an influx in bank deposits; and Community Reinvestment Act (CRA) modernization. 

Kashkari on webinar

Minneapolis Fed President Neel Kashkari

 

Wisconsin’s Recovery Slower Than Minnesota’s, But Regional Recovery Mirrors That of the Nation 

Kashkari said that overall, our region looks a lot like the nation, but there are differences. Wisconsin started recovering more quickly than Minnesota did, but then the recovery became slower over the last six months to year. What happens with COVID will continue to matter because workers getting sick will be a disruption to economic activity. 

Kashkari noted that economic recovery since initial COVID-19 shutdowns has been uneven. “On one hand, GDP is fully recovered. . . but different sectors have been affected differently,” said Kashkari. “Many workers have found jobs. . . and while the unemployment rate has come down, we are still about 4–6 million workers short of where we should be, had there been no pandemic.”   

Demand for Labor Has Recovered More Quickly Than Supply  

The labor market was one of the main topics Kashkari responded to in the Q & A. 

“One of the things that I learned before the pandemic was that the vast majority of Americans want to work,” said Kashkari. “Every time businesses told us ‘we’re out of workers,’ as wages started to climb, workers came back in, and that was resoundingly positive for everyone. . . I still believe that’s true.”  

Kashkari commented that people of all income levels have more savings and more options — and there’s still a lot of fear of getting COVID or bringing it home to a vulnerable family member. The demand for labor has come back, but it’s going to take longer for people to feel comfortable coming back into the job market.  

Two Rate Hikes Likely in 2022 

With regard to inflation, Kashkari predicted it will be transitory, though it has been higher and has lasted longer than he had expected. He referred to his essay, titled “Two Opposing Risks,” which was published just prior to his presentation, and said he foresees two interest rate hikes this year. The rate rises may require sacrificing some gains in employment in order to keep inflation under control. 

Role of Banks in Communities Highly Appreciated 

Kashkari highlighted how community banks stepped up powerfully through the Paycheck Protection Program. “[Banks] have managed exceptionally well during the pandemic,” he said, adding that he has nothing but admiration for community banks and the role they served. WBA’s Oswald Poels expressed gratitude on behalf of community bankers for the recognition of their efforts. 

Kohl and Oswald Poels

Dr. David Kohl and Rose Oswald Poels

Economic Mega Trends 2022 and Beyond 

Dr. David Kohl, a highly anticipated speaker at events hosted by WBA and state banking associations around the country, discussed ten global macro-economic mega trend disruptors. The renowned economist and professor emeritus at Virginia Tech also responded to audience questions in a dialog moderated by Oswald Poels. 

Disruptors Present Both Challenges and Opportunities 

Some of the major disruptors Kohl highlighted in his presentation were globalization; environmental, social, and governance (ESG); and technology and automation. He provided a recent historical overview of inflation and provided a watch list for short- and long-term inflation. “Uncertainty concerning inflation, geopolitics, supply and marketing chains creates challenges but also presents opportunities,” said Kohl. “This is true for businesses and individuals with a high business and financial IQ that follow the process and execute a business plan.” 

Global Perspective Key to Success 

Kohl gave an overview of markets around the globe to keep an eye on, including Asia/China and Europe/Russia. “’Think globally, but act locally’ is a theme for success in the decade of the 2020s,” advised Kohl. “Observe economic mega trends from afar and connect the dots to determine how they impact your bank, business, employees, and customers’ lives.”   

Wisdom for Banking 

Like any good educator, Kohl had words of wisdom to share with the audience beyond what can be found in textbooks and data reports. “Success in life and business is about managing the controllables and managing around the uncontrollables,” he explained. “From the board room to business front lines, one cannot manage what happens in Washington, D.C., Beijing, or Brussels, but can attempt to manage around uncontrollable factors using scenario planning. Focus energy and strategy on the controllable elements with tactics that are agile and adaptive given the economic landscape.” 

If you were unable to attend the live broadcast, you can still register to receive access to the recording through January 18, 2022 plus resources provided by Kashkari and Kohl. 

Wisconsin Experts Offer Sector Forecasts 

As an extension of the Midwest Economic Forecast Forum, WBA has compiled eight sector-specific reports from industry experts on what 2022 will hold for Wisconsin. The reports include insights from Rose Oswald Poels, Wisconsin Bankers Association; Robb Kahl, Construction Business Group; Kevin Krentz, Wisconsin Farm Bureau Federation; Brandon Scholz, Wisconsin Grocers Association; Eric Borgerding, Wisconsin Hospital Association; Kurt Bauer, Wisconsin Manufacturers & Commerce; Michael Theo, Wisconsin Realtors Association; and Tom Still, Wisconsin Technology Council. 

To read the full Wisconsin Economic Report, please visit wisbank.com/2022forecast. 

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WBA Wisconsin Economic Report
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WBA Releases Wisconsin Economic Report

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WBA Wisconsin Economic Report

Wisconsin Banks Strong Heading into 2022

Rose Oswald Poels

Banks well-positioned to help customers navigate any economic headwinds

By Rose Oswald Poels, WBA President and CEO

As we continue to navigate the evolving health pandemic heading into 2022, Wisconsin banks are well-positioned to serve the varying needs of their customers and communities. Through the third quarter of 2021, Wisconsin’s 176 headquartered banks are financially strong with continued high levels of liquidity that will allow them to meet their customers’ various borrowing needs.

The continued resiliency of the industry was evident in the Federal Deposit Insurance Corporation’s (FDIC) third quarter numbers. Nearly all of the industry is profitable and more than 72% of Wisconsin banks saw earnings gains and good credit quality through the third quarter of 2021. Wisconsin banks also saw a slight increase in net loans in the third quarter compared to the prior quarter, led largely by residential real estate lending; however, on a year-over-year (YoY) basis, lending was down 2.44%.

Overall, loan demand throughout last year was weak, and I expect that to continue for at least the first six months of 2022 and perhaps longer. Commercial loan demand was particularly low as Wisconsin banks saw a more than 23% decline in commercial and industrial loan portfolios in the third quarter of 2021 compared to the same quarter the prior year. This is largely attributed to factors, such as workforce shortages and supply chain issues, that will persist into 2022. These two factors alone have stunted growth in the business sector as many retail businesses are forced to alter their hours of operation and manufacturers to cut back production, all of which results in lower loan demand. In addition, many of these businesses received one or more forms of government stimulus or low-cost emergency loans, resulting in lower demand for traditional loans from banks as their balance sheets remained financially healthy.

The agricultural sector is expected to have a growth in profitability in the coming year in part to having received government stimulus or low-cost emergency loans over the last few years as well as having experienced a strong year last year. Farmland loans remained at nearly the same levels in the third quarter of 2021 compared to both the prior quarter and the same period in the previous year. Farm loans rose by 3.26% compared to the prior quarter but were down 7.83% compared to the third quarter in 2020. According to the national Fall 2021 Agricultural Lender Survey produced jointly by the American Bankers Association and Farmer Mac, agricultural lenders expect 70% of their borrowers to be profitable through 2022.

Wisconsin banks continue to be a safe place for consumers to keep their money, as evidenced by a 10.42% YoY climb in deposits from the third quarter of 2020 compared to the third quarter of 2021. I expect these deposit balances to remain high as economic headwinds in 2022, notably inflation and the Omicron variant of COVID-19, will likely cause stock market fluctuations that often make investors nervous.

Despite these economic challenges, I expect the Federal Reserve to raise interest rates only once during 2022, which will impact the banking industry’s profitability. With continued weak overall loan demand and the prolonged low interest rate environment putting pressure on the net interest margin of Wisconsin banks, 2022 could be a more difficult year for the banking industry. Nonetheless, with the industry’s strong financial condition, banks are positioned well to weather the upcoming year.

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Founded in 1892, the Wisconsin Bankers Association (WBA) is the state’s largest financial industry trade association, representing more than 200 commercial banks and savings institutions and over 21,000 employees.

The Association represents banks of all sizes from banks in rural Wisconsin to the state’s largest financial institution in Green Bay, and nearly 98 percent of banks in the state are WBA members.

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WBA Wisconsin Economic Report

Tech Will Help Drive Economy in Unpredictable Year

By Tom Still, WTC President

The list of economic uncertainties for 2022 is long and complex, with COVID-19 variants, supply chain woes, energy disruptions, climate-change anxieties, and political frictions around the world producing jittery markets.

It’s time to look for trends in technology to calm frazzled nerves on Wall Street as well as Wisconsin’s Main Streets.

Analysts at International Data Corp., the global market intelligence firm, predict the technology industry is on track to exceed $5.3 trillion in 2022 — thus returning to the 5% to 6% annual growth rate typical before the pandemic. The United States is the world’s largest tech market, representing about a third of the projected total at $1.8 trillion.

Tech overcame the 2020 speed bump precisely because COVID-19 triggered so much change. The workplaces of today are no longer easily defined. Changes in business travel forced innovation. Cybersecurity threats led to more investment across industry lines, from financial services to “Mom and Pop” retailers. Phrases such as “quantum computing,” “virtual reality,” and “artificial intelligence” were once the exclusive lingo of computer scientists; today, they’re part of the business plans for many companies.

It all points to bigger tech budgets, greater investment and more innovation pushing through the economic super-structure.

Technology will continue to disrupt many verticals. Health care is being transformed through telemedicine and wearables, not to mention breakthroughs in diagnostics and therapeutics. The jury is out on how effective remote learning has been for students of all ages, but online education will continue to have a role in the classroom. Sales through eCommerce in the United States continue to soar (hence, some of today’s supply chain troubles) and trends such as cryptocurrency are altering the financial world.

Tech can help slow climate change effects through conservation controls in homes, offices, cities, and power plants, even if “crypto-mining” has become an energy vampire. Likewise, as technology displaces many people in the workforce, it will create more new jobs than it destroys. The trick is ensuring that people are trained to do the work and opportunities don’t bypass women and minorities.

There are some threats to U.S. tech sectors, but also opportunities for Wisconsin to grow as a tech-savvy state.

In Washington, D.C., Congress should establish data privacy rules that are national in scope versus a state-by-state approach that could hamper companies engaged in eCommerce, finance, or insurance. Congress should avoid unnecessary taxes on venture capital managers and not pass an antitrust bill that would shut down “exit” options for young companies.

Congressional consensus around bipartisan plans to invest federal dollars in key research areas could help Wisconsin, especially if the state’s research universities and private partners can compete for one or more R&D “hubs” envisioned through the National Science Foundation.

In the Wisconsin Legislature, the refining of the state’s investor tax-credit law will lead to more angel and venture capital dollars flowing into young companies. When the Qualified New Business Venture law took effect in 2005, angel and venture capital investments could be measured in the tens of millions of dollars. The 2021 total will easily exceed $500 million, in part because those credits are pulling four times their weight in private investment. Pending bills would improve the law.

The new year may be tumultuous in many ways, but growth in tech markets could help smooth choppy waters.

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The Wisconsin Technology Council is the independent, non-partisan science and technology advisor to the governor and the Legislature.

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WBA Wisconsin Economic Report

Wisconsin Housing Market Remains Strong in 2021 Even as Inventory Tightens

By Michael Theo, WRA President and CEO

With insights from Dave Clark, economist with Marquette University

After a very short two-month recession in March and April of 2020 that mirrored the pandemic-induced economic lockdowns, the U.S. economy bounced back and grew in the second half of the year. Aggressive actions by the Federal Reserve combined with significant stimulus spending approved by Congress led to strong growth in the first half of 2021, with real (inflation adjusted) GDP up by just over 6% for each of the first two quarters of the year.  But growth weakened significantly in the 3rd quarter, and real GDP growth came in at just 2%.  So why has economic growth slipped?  The short answer is that there are significant headwinds on the supply side of the economy that hampered growth including disruptions to supply chains, ongoing labor shortages and rising energy prices. The stimulus spending combined with loose monetary policy has put a lot of money into the economy, but without adequate supply, the economy is growing well below its potential. And for the first time in decades, inflation has become a serious problem. The annual inflation rate was below 2% for the first two months of 2021, but it began to grow in March.  Since May it has been at or above 5% and it grew to 6.2% in October, a level not seen since November of 1990.  Although the Fed suggested earlier in the year that inflation was likely to be transitory, and price pressures would subside once the supply chain improved, inflation thus far has been a persistent and growing problem. Fed Chairman Jerome Powell indicated in late November that the Fed may need to reconsider its easy money strategy to tamp down inflationary pressures.

The state housing market has seen strong demand for a number of reasons. First, there is significant pent-up demand as Millennials are finally buying homes. Second, the state has seen solid job growth over the previous year and statewide labor market that is now effectively at full employment with the state unemployment rate falling to 3.2% in October. Finally, mortgage rates have remained in the neighborhood of 3% all year, which is very low by historical standards. The problem is that supply has not kept up with demand. A balanced housing market is one that has six months of available supply, and the state has been well below that benchmark for nearly four years. Inventories in 2021 never rose above 3.4 months of supply, which signals a very strong seller’s advantage in the market. Strong demand combined with weak supply is a recipe for stagnate sales growth and sharply increasing home prices, which is exactly what we have seen this year. Through the first 10 months of 2021, median prices rose 9.5% compared to that same period in 2020, but sales are essentially even with last year. It is important to point out that we are keeping pace with the record sales of last year so 2021 will still be a very good year for home sales. But unless inventories improve, sales in 2021 we are unlikely to surpass the record home sales from last year.

Looking ahead to 2022, the Fed needs to tread carefully. Increasing short run interest rates will lower inflationary pressures, but if it is too aggressive, the strategy runs the risk of slowing economic growth.  However, inflation lowers consumer purchasing power, and since consumption is approximately two thirds of real GDP, inflation can slow growth in the overall economy. Indeed, the Conference Board’s Consumer Confidence Index fell in November due in part to inflationary concerns. We believe the Fed will find the right balance to lower inflationary risks without increasing the risk of recession in 2022.

The state housing market is likely to see another solid year for sales in 2022. Although rising prices have dampened demand slightly, demand conditions are expected to remain favorable with ongoing job growth and continued household formation by Millennials. Mortgage rates will likely increase modestly but they will remain low by historical standards. The state should see some modest improvement in home inventories as Baby Boomers increasingly transition out of owner-occupied housing and new construction continues to increase. However, the housing market will still be a seller’s market in 2022. Finally, home prices pressures have been moderating since late summer, and we expect that moderation to continue. We are unlikely to see double-digit price increases in 2022.

Policymakers at the national level should avoid passing spending bills that overstimulate the economy and increase inflation, and the Biden administration would be well advised to revisit its energy policy to further mitigate inflationary risks. At the state and local level, easing regulatory pressures on new construction can also help to improve the supply of housing in the state and reduce price pressures for buyers.

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Founded in 1909, the Wisconsin REALTORS® Association (WRA) is one of the largest trade associations in Wisconsin. It represents and provides services to more than 15,000 members statewide. WRA’s goal is to promote the advancement of real estate in Wisconsin and provide cutting-edge tools to help REALTORS® enjoy a successful career and be competitive in their market.

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WBA/ABA The Banking Industry

The Banking Industry is an essential introduction to the business of banking. The course covers the evolution of banking since the 2008 financial crisis, the role of banks in the U.S. economy and the environment in which banks operate and compete. It provides a look into various banking career tracks to inspire and prepare and motivate new bankers and covers innovations in financial products.

Audience: Anyone who needs an introduction to banking, whether just starting a career or a more experienced professional from a different industry.

Price: $215

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WBA/ABA The Banking Industry

The Banking Industry is an essential introduction to the business of banking. The course covers the evolution of banking since the 2008 financial crisis, the role of banks in the U.S. economy and the environment in which banks operate and compete. It provides a look into various banking career tracks to inspire and prepare and motivate new bankers and covers innovations in financial products.

Audience: Anyone who needs an introduction to banking, whether just starting a career or a more experienced professional from a different industry.

Price: $215

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WBA/ABA Money and Banking

A fundamental study of how money functions in the U.S. and world economies. How money supply, the banking system, the Federal Reserve and the federal government are all interrelated, and how changes in the financial system can affect individuals, businesses, and governments on a world-wide basis are covered.

The required textbook for this course is Money and Banking.

IMPORTANT:  Be sure to order the required book for this course.  We recommend that you FIRST select and add your course session to the shopping cart, then select your preferred format of book from the “Recommended Training” options that appear alongside the shopping cart.

Audience: Bank personnel who have not had a formal course in money and banking and who wish to increase their understanding of the banking industry; officer trainees through the mid-management level.

Price: $430

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WBA/ABA Money and Banking

A fundamental study of how money functions in the U.S. and world economies. How money supply, the banking system, the Federal Reserve and the federal government are all interrelated, and how changes in the financial system can affect individuals, businesses, and governments on a world-wide basis are covered.

The required textbook for this course is Money and Banking.

IMPORTANT:  Be sure to order the required book for this course.  We recommend that you FIRST select and add your course session to the shopping cart, then select your preferred format of book from the “Recommended Training” options that appear alongside the shopping cart.

Audience: Bank personnel who have not had a formal course in money and banking and who wish to increase their understanding of the banking industry; officer trainees through the mid-management level.

Price: $430

/by
, , , , , , , , , , ,

WBA/ABA The Banking Industry

The Banking Industry is an essential introduction to the business of banking. The course covers the evolution of banking since the 2008 financial crisis, the role of banks in the U.S. economy and the environment in which banks operate and compete. It provides a look into various banking career tracks to inspire and prepare and motivate new bankers and covers innovations in financial products.

Audience: Anyone who needs an introduction to banking, whether just starting a career or a more experienced professional from a different industry.

Price: $215

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,

WBA/ABA CRCM Managing Interest Rate Risk

An exploration of interest rate risk measurement techniques such as GAP, earnings sensitivity analysis, Duration GAP and economic value of equity sensitivity analysis. Risk management policy implementation and how to change overall interest rate sensitivity through balance sheet adjustments or derivative contracts are discussed.

Audience: Managing Interest Rate Risk is a rigorous course designed for individuals involved in asset liability management or line managers making pricing, investment, or funding decisions that impact interest rate risk.

The required textbook for this course is Bank Management, 8th Edition.

IMPORTANT:  Be sure to order the required book for this course if you do not have it.  We recommend that you FIRST select and add your course session to the shopping cart, then select your preferred format of book from the “Recommended Training” options that appear alongside the shopping cart.

*Please note this book is used for all four Bank Management courses: Managing Interest Rate Risk, Analyzing Bank Performance, Managing Funding, Liquidity, and Capital, and Managing the Bank’s Investment Portfolio.*

Price: $660

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,

WBA/ABA CRCM Managing Interest Rate Risk

An exploration of interest rate risk measurement techniques such as GAP, earnings sensitivity analysis, Duration GAP and economic value of equity sensitivity analysis. Risk management policy implementation and how to change overall interest rate sensitivity through balance sheet adjustments or derivative contracts are discussed.

Audience: Managing Interest Rate Risk is a rigorous course designed for individuals involved in asset liability management or line managers making pricing, investment, or funding decisions that impact interest rate risk.

The required textbook for this course is Bank Management, 8th Edition.

IMPORTANT:  Be sure to order the required book for this course if you do not have it.  We recommend that you FIRST select and add your course session to the shopping cart, then select your preferred format of book from the “Recommended Training” options that appear alongside the shopping cart.

*Please note this book is used for all four Bank Management courses: Managing Interest Rate Risk, Analyzing Bank Performance, Managing Funding, Liquidity, and Capital, and Managing the Bank’s Investment Portfolio.*

Price: $660

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questions@wisbank.com

608-441-1200

4721 S Biltmore Ln.
Madison, WI 53718

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