Wisconsin and Milwaukee-area business leaders remain optimistic about the economy and their businesses, according to recent surveys from Wisconsin Manufacturers & Commerce and the Metropolitan Milwaukee Association of Commerce.
In the WMC survey, with 203 respondents, 81 percent said the U.S. economy is “strong” or “very strong,” up from 58 percent who said so at the start of the year. Eighty percent said the Wisconsin economy is “strong” or “very strong,” up from 70 percent at the start of the year.
“The landmark federal tax reform, along with other pro-business actions by the Trump administration, seems to be driving the optimism,” said Kurt Bauer, president and chief executive officer of the WMC. “Reversing the expensive and stifling policies of the previous administration isn’t just creating more optimism, it is also increasing employment, wages and driving stronger GDP growth.”
The Federal Reserve Bank of Atlanta forecasts second quarter GDP growth of 3.9 percent.
Local executives also remain optimistic, according to a survey of MMAC members. Optimism levels for the third quarter mostly improved compared to the second quarter outlook, and optimism for all of 2018 remains about the same as at the beginning of the year. The MMAC’s Business Outlook Survey contains responses from 98 Milwaukee-area firms.
Of the businesses surveyed by the MMAC, 74 percent expect rising sales levels during the third quarter, up from the 71 percent who predicted sales gains in the second quarter. Sixty-eight percent expect profit increases in the third quarter, up from the 66 percent who predicted profit increases in the second quarter. Fifty-seven percent plan to increase employment in the third quarter, down from the 61 percent expecting to add jobs during the second quarter.
For all of 2018, 81 percent now expect sales increases, compared to 80 percent who predicted that at the beginning of the year; 72 percent expect profit increases this year, down from 75 percent at the start of the year; and 68 expect to increase employment this year, down from 69 percent at the beginning of the year.
“Solid levels of optimism were expressed by area companies, both for the third quarter and for 2018 as a whole,” said Bret Mayborne, the MMAC’s economic research director. “Over the course of 2018’s first five months, the area’s overall job trend showed marked improvement, particularly in manufacturing. Survey results suggest that local businesses expect this trend to continue into the third quarter and beyond.”
Only two percent of those responding to the MMAC survey plan to reduce employment during the third quarter, while 41 percent predict no change.
“(The) survey results suggest job gains will continue into 2018’s third quarter,” Mayborne wrote in his report. “While the percentage seeing job increases is down somewhat from second-quarter expectations, it remains at the high end of the range of optimism expressed in the current expansionary period.”
With the unemployment rate in Wisconsin now at 2.8 percent, some employers are struggling to find workers they need, which could put upward pressure on wages. Respondents to the MMAC survey said they plan to increase wages and salaries by an average of 3.5 percent over the next 12 months, which is down slightly from the 3.6 percent increase forecast three months ago.
In the WMC survey, 55.5 percent of business leaders say they expect wages to grow above 3 percent in the next six months.
Of the WMC survey respondents, 72 percent said the new federal tax law has resulted in savings for their companies. Of those, 72 percent said they would reinvest the savings in their companies and 33 percent said they would use the tax savings to increase wages and benefits. Twenty-five percent said they would use the tax savings to hire additional workers.
