Thank you to the following industry leaders who contributed to this report. A pdf copy of the below articles is available here.

Rose Oswald Poels, Wisconsin Bankers Association

Michael Theo, Wisconsin REALTORS Association

Dale M. Beaty, Wisconsin Farm Bureau Federation

Brandon Scholz, Wisconsin Grocers Association

Eric Borgerding, Wisconsin Hospital Association

Tom Still, Wisconsin Technology Council

Robb Kahl, Construction Business Group

Kurt Bauer, Wisconsin Manufaturers & Commerce


 

“Wisconsin banks will end 2019 on a positive, profitable note. While the number of headquartered banks declined, total assets held by banks continues to rise.”

As Reflection of State Economy, Banks Will Continue Steady Growth

By Rose Oswald Poels, President and CEO
Wisconsin Bankers Association

The economy proved to be more resilient than experts predicted in 2019, and I expect it will remain healthy and stable throughout 2020. Ahead of last year, as a result of signals from the Fed, experts predicted that the economy may start to slow and that the Fed would continue to raise interest rates at least one or two more times to help keep a potential recession in check. Not only did these predictions prove to be untrue, but in fact, after raising rates four times in 2018, with the last one occurring in December of 2018, the Fed indeed lowered rates three times in 2019 as a counter-balance, something most experts never thought would occur. In the year ahead, the Fed has signaled it will not raise rates in 2020. I expect that to hold true; however, there is always uncertainty heading into a presidential election which can create economic headwinds. As a result, if the Fed decides to raise rates, it likely will be only one time late in the year.

Economic indicators are positive on balance as we head into the new year. A strong employment report was released in mid-December when the Bureau of Labor Statistics (BLS) reported that 266,000 jobs were added in November, making it the best month for job growth since January. In addition, the BLS reported that the Consumer Price Index (CPI) posted its second consecutive month of gains. Through November, year over year, the CPI met the Fed’s inflation target of 2% for the first time since April. In addition, progress is occurring with our global trade deals while global economies begin to stabilize to the point where the economies of other countries are no longer of concern to the financial markets. As a result of these and other factors, the U.S. economy will continue to modestly grow in 2020. Indeed, the Fed’s latest projection for 2020 is 2.0% real growth in GDP.

The continued strong economy led to a meaningful number of announced bank sales this last year in Wisconsin, and I expect that to continue into 2020, although at a slightly slower pace than what we experienced in 2019. Through the date of this article being written, there were 16 headquartered banks in Wisconsin that announced they were merging with another bank, most of which were other Wisconsin headquartered banks. Recently, the FDIC published third-quarter numbers and compared to last year at this same time, Wisconsin has 10 fewer headquartered banks through Sept. 30, 2019, which represents a loss of 5% of the total number year over year. Of course, many of the announced mergers have not yet closed so this percentage will increase as 2019 ends.

Generally, Wisconsin banks will end 2019 on a positive, profitable note. While the number of headquartered banks declined, total assets held by banks continues to rise. Through the third quarter of 2019, total assets grew, year over year, by nearly 3%, and Return on Assets also grew slightly during this same period from 1.09% to 1.11%.

Banks continue to be burdened by excessive regulation that puts them at a disadvantage compared to non- traditional lenders. In many parts of the state, banks are struggling to find enough core deposits to fund loan demand which necessarily requires them to raise deposit rates in order to attract more local and out-of-market deposits. This can negatively affect net interest margin (NIM), a common measure of a bank’s profitability, which remained the same through the third quarter of 2019 as it was in 2018, at 3.67%. It is important to note, though, that a NIM of 3.67% is still measurably higher than the 30-year record low set in 2015 of 2.98%.

Banks are a reflection of their local economies, so as modest economic growth continues in 2020, Wisconsin banks will continue to experience slow but steady growth as well.

Founded in 1892, the Wisconsin Bankers Association is the state’s largest financial industry trade association, representing nearly 250 commercial banks and savings institutions, their nearly 2,300 branch offices and 23,000 employees.

“The weakness in the market is not demand-based; it’s on the supply side… With such limited supply, it’s no surprise that sales struggle to increase even as prices grow rapidly.”

Home Inventories Remain Tight, Constraining Sales, and Pushing Prices to Record Levels

By Michael Theo, President and CEO
Wisconsin REALTORS Association
With insights from Dave Clark, economist with Marquette University

The national economy is now in its 11th year of expansion, making this the longest continuous period of growth in U.S. history. And while there have been preliminary signs of economic moderation, the national economy is currently at full employment and is continuing to grow, albeit at a slower pace. Economists indicate the economy is facing “headwinds.” Specifically, trade disputes with our largest trading partners remain unsettled which has led to declines over the last 12 months in two of Wisconsin’s prominent sectors: manufacturing and agriculture. Concern about the economic health of Europe in the face of Brexit has further clouded expectations. Nonetheless, the economy continued to expand through the first three quarters of 2019, and early indicators of 4th quarter growth by the Federal Reserve indicate that real GDP growth will likely remain in positive territory, similar to the 2nd and 3rd quarters which grew at approximately 2%, rather than the 1st quarter pace of 3.1%.

Against this backdrop, the Wisconsin housing market saw existing home sales slip slightly below 2018 levels, even as median prices have increased at more than three times the rate of inflation, hitting new all-time highs. On a year-to- date basis through the end of October, closed sales are only 1.5% below the pace of last year, whereas median prices are up 7.1% on an annualized basis.

The reason for these trends comes down to simple supply and demand. Housing demand remains strong as statewide unemployment rates are below 4%, the level economists typically classify as full employment. Indeed, the statewide rate fell to 2.8% in April and May of 2019 and while it has steadily ticked upward, it stood at just 3.3% as of October. Moreover, the state added 16,500 non-farm jobs between October 2018 and October 2019 according to the WI Department of Workforce Development. Another driver of demand is the 30-year fixed mortgage rate which fell to 3.69% in October, only marginally higher than the all-time low of 3.35% which occurred in late 2012. Finally, on the demographic front, older Millennials (i.e., those in their mid to late 30’s) have gradually increased their pace of homeownership. The weakness in the market is not demand-based; it’s on the supply side. Statewide inventories of existing homes for sale fell to just 4.6 months of supply in October, which is well below the six-month benchmark that characterizes a balanced market. The supply problem is especially severe in the metropolitan counties (i.e., 3.8 months in October). Only rural counties would be classified as buyer’s markets with 7.8 months of supply. New construction of single-family homes is an important source of supply, but it remained flat this year, and foreclosure activity is very low by historical standards. With such limited supply, it’s no surprise that sales struggle to increase even as prices grow rapidly.

Going forward, the risk of recession is growing. Indeed, the Fed shifted from trying to slow the economy in 2018 to attempting to stimulating growth in 2019. With inflation under control, the Fed has indicated it’s taking a pause from any attempts to increase growth. Absent any triggering international crises, we expect that the economic expansion will continue at a modest pace through at least the third quarter of 2020. Wisconsin has improved its business climate over the past decade. So long as the U.S. economy stays out of recession and Wisconsin maintains its pro-business strategies, the state economy should continue to expand. Hopefully, the administration settles its trade disputes with China, and the US-Mexico-Canada trade agreement is ratified by Congress since this will help our manufacturing and agricultural sectors. Finally, we expect gradual supply improvements as Baby Boomers transition away from owner-occupied housing. Statewide, new listings of existing homes have recently increased, which is hopefully a sign that this transition is gathering some much- needed momentum. This will allow sales to improve in 2020, as price increases moderate from their current pace.

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 16,500 members statewide. WRA’s goal is to help REALTORS® enjoy successful careers and stay competitive in their local markets by offering hundreds of products and services.

“… there are positive signs of improvement. Farm incomes for 2020 are expected to rise by 5.4%. The price dairy farmers receive for their milk is also expected to rise modestly.”

Emerging From the Perfect Storm

By Dale M. Beaty, Chief Administrative Officer
Wisconsin Farm Bureau Federation

Agriculture is a driver of Wisconsin’s economy. According to Wisconsin’s Department of Agriculture, Trade and Consumer Protection, agriculture contributes $104.8 billion annually to our state's economy. Food processing activity contributes $82.7 billion to industrial sales. The dairy industry itself contributes $45.6 billion to Wisconsin’s economy each year. The state is home to 64,793 farms on 14.3 million acres. The average farm size in Wisconsin is 221 acres. Annually, Wisconsin agriculture provides 435,700 jobs or 11.8 percent of the state’s employment. On-farm production contributes 154,000 jobs. Processing contributes 282,000 jobs.

The Bad News
The average farmer’s income declined nearly 35% between 2013 and 2018 according to the U.S. Department of Agriculture. While farmer income declined, input costs such as labor, energy, insurance, equipment and maintenance continued to rise. Sadly, Wisconsin leads the nation in Chapter 12 farm bankruptcy filings with 45 in 2019. Financial struggles and the prospect of losing their way of life has led to increased depression among farmers. Mother Nature delivered numerous body blows during the planting, growing, and harvest seasons this year. Wet weather delayed planting, a cool summer slowed crop maturation, and a very wet and cold fall has slowed and, in many cases, prevented harvest. To add insult to injury, agriculture has become a focal point for political infighting.

The Good News
As 2019 winds down and 2020 is quickly approaching, there are positive signs of improvement. Farm incomes for 2020 are expected to rise by 5.4%. The price dairy farmers receive for their milk is also expected to rise modestly.

Remaining Challenges
Many farmers support the President’s attempts to open foreign markets because they recognize free trade is very favorable to the agricultural economy in the long-term. However, in the short-term, farmers are bearing the brunt of trade disagreements because of retaliatory tariffs.

Wisconsin farmers need federal immigration reform to maintain a consistent and reliable workforce. Farmers want the federal government to create an immigration system which allows them to legally employ foreign workers. This is important because there is a shortage of workers in Wisconsin, and very few Americans are willing to consistently do the manual labor required on farms.

Emerging From The Perfect Storm in 2020
After such a sustained economic downturn, it may take farmers years to repair the damage done and to recover financially. With agriculture contributing nearly $105 billion to our state’s economy, it’s in everyone’s best interest for our state’s agriculture economy to improve. As the new year begins, let’s hope the good news continues to grow as solutions are found to the challenges facing our farmers. After a deluge of poor prices and bad luck, our farmers are looking forward to emerging from dissipating storm clouds to see the sun and be warmed by the prospects of future prosperity.

WFBF is the state’s largest general farm organization, representing farms of all sizes, commodities, and management styles. There are nearly 47,000 members that belong to the Wisconsin Farm Bureau. Voting Farm Bureau members (farmers) annually set the policy the organization follows, and are involved in local, state and national affairs, making it a true grassroots organization.

“Customers of all demographics continue to drive online shopping sales up and according to Forbes/Statista will more than double in the U.S. from $14.2 billion in 2017 to $29.7 billion in 2021 and that includes 77% of adults that have not used curbside grocery pickup!”

Constant Changes Which Change All the Time

By Brandon Scholz, President and CEO
Wisconsin Grocers Association

That’s called flux, and guess what… we just defined the grocery business! Whether it’s your neighborhood grocery store or the supermarket down the street, change occurs at every level in the retail food world.

There are the obvious changes like new products and packaging designed to appeal to a broad variety of shoppers from young to old. Grocery stores carry on average 45,000+ products and grocers work to match products to consumer demands on a daily basis.

In some categories, products take on a life of their own. Winsight Grocery Business reports that “Three decades ago, not only did the bottled water category essentially not exist but was scorned as a non-starter by the few people who knew about it. After all, what consumer would be foolish enough to purchase a product that he or she could get just by turning on the kitchen faucet?”

Smartwater is a brand of bottled water owned by The Coca-Cola Company. Introduced in 1996 in the United States, by 2016 it was one of the top five brands of bottled water in that country, with sales worth nearly $830 million in 2017 according to Statista. Now bottled water commands an entire aisle.

But, as shoppers and the economy change, so does the way grocers appeal to shoppers' basic needs. To start, a good economy affords retailers the opportunity to try new products and promotions and take risks (more than usual). However, it’s likely the one thing grocers can’t do is raise prices.

Shoppers are fickle. The economy drives their spending patterns and palette. When things are good they may buy higher-end products, better cuts of meat, and maybe a more expensive bottle of wine. But it also means that they may choose to go out to a restaurant three nights a week instead of just a fish fry on Friday night.

The economy also creates challenges that grocers can use to make other changes. As mentioned raising prices is a no-no. But retailers may be willing to put more into paychecks to entice workers in a highly competitive market or up the pay grade to keep their employees from jumping to a competitor.

A strong economy is an opportunity to make investments in the store through a remodel, facelift, or new equipment. Two years ago the Wisconsin legislature rolled back the punitive Personal Property Tax on retailers affording them the opportunity to invest in their business, improving the store, and making the shopping trip for their customers a pleasant endeavor.

But that pendulum can swing back just as fast as it showed up. Remember the South Beach Diet? That aisle dried up pretty quick. Same with generic packaging—boom—gone. But today, private label products are strong sellers and afford grocers the opportunity to improve their profitability in a razor-thin margin environment.

For sure you’ll see changes in the grocery store. Products and packaging will change, but so will the appeal of something new. A great debate is emerging in the grocery industry between plant-based food and traditional meat and dairy products. Will Wisconsin’s agriculture community shut down the rapidly appealing offerings of Impossible (soy-based) burgers, Almond Breeze (milk substitute) that is non-dairy, lactose and gluten-free and other plant- based products that are rapidly filling sections of the store whose growth is surprising many industry watchers. Is this the new bottled water or TV dinner?

In a good way, the grocery biz is in a constant state of flux. It helps grocers stay on top of their game and keep a sharp eye on what appeals to their customers.

Customers of all demographics continue to drive online shopping sales up and according to Forbes/Statista will more than double in the U.S. from $14.2 billion in 2017 to $29.7 billion in 2021 and that includes 77% of adults that have not used curbside grocery pickup!

As online grows and consumers demand more customer service, the Wisconsin legislature will have to recognize that home delivery of groceries, wine, beer, and spirits will have to become a reality. It is the way of our economy, technology, marketing, customer service, and more.

From the corner grocery store, the growing platform in the convenience store business to the supermarket in the suburbs and the grocery store in the nearby strip mall, grocers are in a state of flux to survive.

The Wisconsin Grocers Association represents nearly 1,000 independent grocers, retail grocery chain stores, warehouses and distributors, convenience stores, food brokers and suppliers. Wisconsin grocers employ over 50,000 people with $815 million in payroll and generate more than $6 billion in annual sales in Wisconsin resulting in approximately $250 million in state sales tax revenue.

“Increasing demand for care coupled with shortages in key health professions and an overall aging health care workforce mean action is needed now for the future.”

Healthcare Remains Strong But Demand and Bureaucracy Straining Workforce

By Eric Borgerding, President and CEO
Wisconsin Hospital Association

Like many Wisconsin industries, hospitals and health systems are critical elements of the state and local economies. According to a new UW-Madison analysis, in 2017 hospitals alone contributed $47 billion annually to the state’s economy in the wages they pay their 108,000 employees and goods and services they purchase in Wisconsin. Include clinics, nursing homes, and other components of the health care system and that number jumps to $119 billion annually and a total of over 326,000 direct jobs. In many cities and counties, hospitals and health systems are the largest employers and lifeblood of
local economies.

In fact, Wisconsin health care has become an “export” industry of sorts. Nationally known for high-quality care, thousands of out-of-state patients travel to Wisconsin every year to receive our world-class care. Those patients spent $2.3 billion in Wisconsin on hospital services alone (the equivalent of over 10% of Wisconsin exports according to 2018 data) and created or supported nearly 30,000 Wisconsin jobs.

By the numbers alone, health care is a critical industry for Wisconsin, providing great care and family-sustaining jobs for many thousands, especially in our rural areas. And unlike demand for goods or services from other industries, demand for health care services does not much fluctuate with the rise and fall of the overall economy, federal monetary policies, or other policy levers aimed at influencing the economy. In health care, demand is largely a function of predictable, yet inevitable, demographics. While health care is one of the most heavily regulated (and regulatorily burdened) industries in the economy, no rule, regulation, or new law passed in Madison or Washington will slow the “silver tsunami” of patients now hitting Wisconsin health.

Last month WHA released its annual workforce report, again alerting the public and lawmakers to the, frankly, alarming demographic-driven challenges facing Wisconsin health care. Consider just these two end-to-end stats:

  • The Wisconsin population over age 75 will increase by 75% from 2017-2032, increasing the number of patients requiring intensive health care.
  • Over the same period, the population under 18 (the doctors, nurses, and caregivers we will need in the future) will grow by only 3.5%.

Increasing demand for care coupled with shortages in key health professions and an overall aging health care workforce mean action is needed now for the future. And while we are working hard to expand the education and training pipeline of future caregivers, Wisconsin will not be able to grow its way out of this workforce problem. We—health care leaders and our elected officials—must be much smarter about how we deploy our current and future workforce and how we leverage technology to extend that workforce.

In the past few months, WHA has advanced legislation expanding use of telehealth, expediting physician licensure, and extending the use of advanced practice clinicians—all intended to better leverage the existing health care workforce. Yet, many caregivers remain burdened with, and burned out by, regulatory red tape. When the average-sized hospital today uses 59 FTEs satisfying regulations and government mandates and physicians and clinicians now devote more time entering data than seeing patients, it’s clear much of health care’s workforce problems are government-created and must be government-solved.

Celebrating its 100th year in 2020, the Wisconsin Hospital Association’s (WHA’s) mission is advocating for the ability of its members to lead in the provision of high-quality, affordable, and accessible health care services, resulting in healthier Wisconsin communities. WHA is the unifying voice for hospitals and health systems across the state. Issue expertise, experience, and credibility make WHA the leading advocate for sound health care policy in Madison and a respected opinion in Washington, D.C.

“In the year ahead, technology will continue to drive innovation across virtually every sector of Wisconsin’s economy.”

Tech Council's 'Vision 2020' Report Shows Progress and Areas of Improvement

By Tom Still, President
Wisconsin Technology Council

 

At the Wisconsin Technology Council, our staff, researchers, and board of directors issued their predictions for the state’s 2020 economy long ago.

In late 2003, to be precise. That was the year the Tech Council issued “Vision 2020: A Model Wisconsin Economy” as a blueprint for the state’s future. It was ambitious. It was detailed. Importantly, it set specific goals for boosting economic output, educating more “knowledge workers” for 21st century jobs, and fostering the growth of investment capital.

Our internal process of measuring the state’s performance against those goals will continue as 2020 unfolds, but it’s not too early to draw some early conclusions about how the state has performed over time – and what that means for the future.

Economic output in Wisconsin has grown pretty much as predicted, with the Vision 2020 goal for that year ($345.2 billion) nearly reached at the close of 2018 ($336.3 billion), according to Federal Reserve estimates. The problem is that Wisconsin hasn’t budged in the 50-state rankings. It was 20th in the base year of 2000 and 20th today.

Exports tell a similar story. The total dollar value of Wisconsin exports was $22.7 billion a year or so ago, up from $10.8 billion in Vision 2020’s base year, but still 19th among the states. Perhaps a truce in the trade wars will move the dial in the years ahead.

Per capita personal income has grown from $28,100 in 2000 to $51,592 a year ago, according to the Fed, but still ranks 23rd among the states and the District of Columbia.

So, if Wisconsin is stuck in neutral in those major categories, is it making progress – or falling short – in others?

Our “Vision 2020” report set a stretch goal of $500 million in annual venture capital investment by 2020. Wisconsin stood just short of $300 million in 2018, according to Tech Council research. Wisconsin will never be California, Massachusetts, or New York when it comes to venture capital, but it should aspire to match Minnesota.

The growth in high-tech jobs has been significant in some parts of the state, according to a mix of recent reports. The Tech Council’s “Vision 2020” report forecast a total of 310,000 “high-tech occupations” by next year, a number that is likely to be exceeded.

The growth has been strongest in the Madison region, where there was a 120% surge in “computer and mathematical” jobs between 2008 and 2018, according to the nonpartisan Wisconsin Policy Forum. In Milwaukee, the increase was more than 25%, compared with 56% in the Green Bay area and nearly 50% for the state overall.

The Policy Forum drew a direct link between the rise in tech jobs and educational attainment, which is spotty in Wisconsin depending on location. “Spreading the benefits of the strengthening economy to other parts of the state likely will require increased college completion in those areas …” the report noted.

In the year ahead, technology will continue to drive innovation across virtually every sector of Wisconsin’s economy. We will use the yardstick of “Vision 2020” to measure where the state has been, and to provide guidance on where the path should lead.

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

“Based on the national construction economists, 2020 is forecasted to be a year of continued, yet slowing growth.”

Construction Industry Economic Outlook for 2020

By Robb Kahl, Executive Director
Construction Business Group

Construction contractor optimism for 2020 is high and backlogs are strong but the question on every contractor’s mind seems to be “When is the next recession?” If you ask Former Reserve Chair Janet Yellen, she believes that “There is always some chance of recession in any year.” Based on the national construction economists, 2020 is forecasted to be a year of continued, yet slowing growth.

The Bureau of Labor Statistics tracks construction employment and construction spending, strong lagging indicators of industry performance. Wisconsin has followed national trends in both of these areas with upward movement since 2010. Construction employment in Wisconsin has accelerated since April 2019 and in the 12-month period between Oct. 2018 and Oct. 2019, employment increased by 3.7% (national average was 2.1%). 2019 construction spending numbers have not been released, but based on national projections, Wisconsin’s construction spending is likely to be close to or slightly surpass the $3.9 billion of non-residential, $5.2 billion of state and local, and $20.1 billion of heavy/civil spending of 2018.

An outlook of slowing growth is supported by FMI’s projection that U.S. construction spending for all sectors will increase from $1.35 trillion in 2019 to $1.46 trillion in 2022. This will be a much more modest growth rate than the national non-residential increases of 21.1% over the last five years, primarily led by strong growth in lodging, office, and amusement and recreation markets. Private office, education, hospital, and warehouse markets are forecasted to lead non-residential construction growth through 2020.

Workforce remains a primary concern for the construction industry. Wisconsin’s low population growth, record low-unemployment and aging population will continue to create challenges for all employers in the state. The construction industry paid $7.8 billion of construction wages and salaries in Wisconsin in 2018, creating significant economic impact. It is critical that the State of Wisconsin continue to invest in career and technical education and apprenticeship expansion in order to meet the future needs of the construction industry for skilled trade professionals.

We need Wisconsin to continue investment in Wisconsin’s infrastructure. Maintaining the buildings, roads, and power supplies is important for taxpayers in the state and is critical to recruiting new business to Wisconsin.

Laura Cataldo, Baker Tilly Virchow Krause, LLP, a WBA Bronze Associate Member, also contributed to this article.

The Construction Business Group promotes and protects the construction industry. They ensure fair contracting laws are followed on public construction projects. They work co- operatively with contractors, employees, and public entities by educating them on fair contracting laws, monitoring projects for fair contracting compliance, and identifying and helping to resolve compliance issues.

“In fact, with a low state unemployment rate of 3.3 percent and solid job growth, the consensus is that Wisconsin will enter the new year in relatively strong condition.”

Wisconsin is Surviving the Trade War

By Kurt Bauer, President and CEO
Wisconsin Manufaturers & Commerce

WMC hosts an economic roundtable six times per year. Participants include economists from the Federal Reserve Bank of Chicago, UW-System (specifically UW-Madison and Whitewater), various state agencies and representatives from sectors viewed as leading economic indicators, like manufacturing and banking.

The last meeting was held in late Nov. 2019 and the discussion was dominated by two questions; is Wisconsin’s manufacturing sector contracting, as has been widely reported by statewide and national media outlets, and will the U.S. fall into a recession in 2020?

Let’s start with manufacturing question. Bloomberg News reported in late summer that Wisconsin lost 5,200 manufacturing jobs between August 2018 and August 2019. That sparked a series of follow up stories in the Wall Street Journal, Washington Post, Los Angeles Times and CBS News about the status of manufacturing in Wisconsin.

All the national media interest in Wisconsin’s economy is easily explained. Wisconsin is expected be an important battleground state in the 2020 presidential election and if the economy is faltering, President Trump has a greatly reduced chance of winning Wisconsin for a second time, which could cost him the White House. Trump is predicating his reelection on job growth, particularly in manufacturing, which is Wisconsin’s largest economic sector.

The national stories have centered on Trump’s trade policies, particularly the impact of U.S. tariffs imposed on China and the subsequent retaliatory tariffs placed on U.S. goods by the Chinese. Without question, those tariffs have had an impact on both Wisconsin’s manufacturing and agricultural sectors. In June, 47% of WMC members, which includes concentrated animal feeding operations (CAFOs), said tariffs on China were having a negative effect on their bottom line.

But interesting enough, 67% said in the same economic survey that they either strongly or somewhat support the tariffs on China in order to address what they see as decades of unfair trade practices by the Chinese at the expense of U.S businesses. For example, China sometimes forces foreign companies to transfer technology to Chinese competitors in exchange for access to their 1.4 billion consumers. China also manipulates its currency, and sometimes dumps products on the global market at prices below the cost of production, stressing if not bankrupting foreign competitors. China is also infamous for the state-sponsored theft of foreign intellectual property that threatens both U.S. economic and national security.

While WMC members would prefer to resolve the trade dispute with China, and other nations for that matter, they have been pragmatic and agile in minimizing the impact of tariffs. Trade is like water; if it is blocked from flowing in one direction, it will flow in another. To that point, China might be the biggest loser in the bilateral trade dispute because many U.S. manufacturers have shifted their supply chains out of China to avoid the tariffs, as well as the other trade abuses mentioned above.

More importantly for Wisconsin is that the decline in manufacturing jobs reported by Bloomberg appears to be totally off the mark. In fact, recent quarterly employment data released by the U.S. Bureau of Labor Statistics (BLS) shows Wisconsin actually gained 8,800 manufacturing jobs during roughly the same period Bloomberg measured. The BLS numbers also showed similarly strong gains in Pennsylvania, another big manufacturing state and key 2020 presidential election battleground.

Also important for Wisconsin is the U.S. House of Representatives has, as of press time, finally agreed to move forward with passage of the United States Mexico Canada Agreement (USMCA), the successor to the outdated North American Free Trade Agreement (NAFTA). A lot has changed since the NAFTA was negotiated in the 1990s and USMCA is clearly an improvement, especially as it relates to intellectual property protections, digital rules and overall trade agreement enforcement.

All of which leads me to the second question debated by the economic roundtable; will there be a downturn in 2020? Not a single economist present at the November meeting predicted one. In fact, with a low state unemployment rate of 3.3% and solid job growth, the consensus was that Wisconsin will enter the new year in relatively strong condition.

Founded in 1911, Wisconsin Manufacturers & Commerce (WMC) is the combined state chamber of commerce, state manufacturers’ association and state safety council. With nearly 3,800 members, WMC is Wisconsin’s largest business association representing employers of all sizes and from every sector of the economy.