At the start of each year, we take a comprehensive look at what lies ahead for the U.S. economy and the southeastern Wisconsin business community.
It is always an interesting, but challenging, exercise. Since we don’t have a crystal ball, who can say for certain what is going to happen in 2019?
After seeing several predictions for an economic slowdown this year, that became our theme for the 2019 economic trends report. But then the U.S. Bureau of Labor Statistics reported a surge in hiring, with the U.S. economy adding 312,000 jobs in Wisconsin, far more than expected. Data for job growth in October and November was revised upward, as well.
Paul Ashworth, chief U.S. economist at Capital Economics, wrote the December jobs report “suggests the U.S. economy still has considerable forward momentum.”
However, several signs still point to slower economic growth in 2019 after a fairly robust 2018.
University of Wisconsin-Madison economists Junjie Guo and Noah Williams predicted that Wisconsin’s economy could lose 50,000 nonfarm jobs this year, which would be the largest decline since 2010. They predict the state’s unemployment rate will rise from 3 percent to 4.2 percent.
“We’re predicting a fairly large slowdown nationally, and so we see that reverberating throughout the state,” said Williams, director of the Center for Research on the Wisconsin Economy.
The Milwaukee-area manufacturing index continues to show growth, but in December it dipped to 52.87, its lowest level since December of 2016.
Wage growth in Wisconsin was strong in 2018, until it dipped sharply in October and November.
Milwaukee-area business leaders are less optimistic about 2019 than they were about 2018, according to the latest survey of Metropolitan Milwaukee Association of Commerce members. Of the MMAC members surveyed, 72 percent predict sales increases for their companies (the lowest level since 2013), 65 percent expect profit increases (the lowest level since 2016) and 63 percent expect to add more employees (the lowest level since 2017).
“Business optimism in the metro Milwaukee area has trended mostly downward in recent quarters,” said Bret Mayborne, the MMAC’s economic research director.
The U.S. economy is showing signs of weakening, according to a fourth quarter market review from Madison-based First Business Financial Services Inc.
“The economic expansion will likely continue into 2019 at a slow and steady pace,” the report says. “At almost 10 years old, this is the second-longest expansion since 1900. Although growth accelerated meaningfully in 2018 on the wings of fiscal stimulus and an improving trade deficit, moving forward growth will moderate as weak productivity, labor force dynamics, waning trade numbers, fading trade stimulus, and higher interest rates slow it to 2 percent or less in 2019 and beyond.”
