News of the Day

Wisconsin’s real gross domestic product grew at a 2.9% annualized rate in the first quarter, the 24^th fastest growth rate in the country, according to new data from the Bureau of Economic Analysis.

The first quarter growth rate was an improvement from 2.1% in the fourth quarter but down from 4.9% in the first quarter last year. For all of 2018, Wisconsin’s economy grew 2.5%, the best year of growth for the state since 2010.

Within the Midwest, North (3.9%) and South Dakota (3.6%) had the strongest growth followed by Ohio (3.5%) and Nebraska (3.4%). Illinois and Indiana grew at the same 2.9% rate as Wisconsin.

The retail trade and finance and insurance segments were the strongest contributors to Wisconsin’s economic growth, accounting for 0.76 and 0.74 percentage points respectively. Nondurable goods manufacturing added 0.51 percentage points and health care and social assistance added 0.41.

Wholesale trade was the biggest drag on Wisconsin’s GDP, cutting 0.14 percentage points. Durable goods manufacturing, transportation and warehousing and accommodation and food service also all cut into the state’s growth.

Wisconsin’s credit rating remains healthy less than a month after the state’s Fiscal Year 2020 budget passed.

Kroll Bond Rating Agency recently assigned the state a rating of AA+ with a positive outlook. S&P Global gave Wisconsin a AA rating for its 2019 general obligation bonds by financial analysis group S&P Global Ratings. And Moody’s maintained the state’s Aa1 rating, also with a stable outlook.

S&P Global Ratings looks at five categories to create its overall state rating, including the state’s economy, management, liability, budget performance and government framework, according to Carol Spain, director of U.S. public finance of S&P.

Spain said Wisconsin’s pension system, one of the best funded in the country, in particular helps to offer flexibility and padding for the state’s budget and reserve balances.

State Treasurer Sarah Godlewski said that she is “glad that Wisconsin’s bond rating continues to remain strong and steady.”

“Ratings impact … bonds prices in the market,” Spain said. “The higher the rating, the lower the interest cost.”

The U.S. trucker shortage is expected to more than double over the next decade as the industry struggles to replace aging drivers and recruit more women.

The driver deficit swelled by more than 10,000 to 60,800 in 2018 from a year earlier, according to a study by the American Trucking Association.

The relief won’t last as replacing an aging pool of drivers gets harder in a tight labor market, said Bob Costello, chief economist for the trade group. The shortage is most acute for long-haul drivers, where the average age is 46, and workers are on the road for weeks at a time.

The ATA estimates that 160,000 driver positions will go unfilled in a decade.

“If things do not change, that’s where we will end up,” he said. “At some point, you go from being an operational pain-in-the-neck for the supply chain to real issues for all of us as consumers.”

In addition to increasing pay, trucking companies are trying to recruit more women, young people and former military personnel. Women make up less than 7% of drivers, and the industry is pushing to entice more with technology that makes trucks easier to drive and more comfortable.

The Arlington, Virginia-based ATA also wants regulators to lower the age for commercial drivers who can cross state lines by three years to 18. Its proposal would increase training and supervision. Cutting the age increases the recruiting pool and enables people to drive straight out of high school instead of choosing another industry, such as construction, Costello said.

On July 10, 2019, the Wisconsin Commissioner of Insurance approved an overall 8.84% rate decrease for worker’s compensation premiums for businesses, effective October 1, 2019.

This is the fourth consecutive year in which worker’s compensation rates have declined in Wisconsin, following a 6.03% decrease in 2018, an 8.46% decrease in 2017, and a 3.19% decrease in 2016. The latest reduction in premiums is expected to result in an annual savings of about $173 million for Wisconsin employers.

“Wisconsin has long been regarded as a national model for its smart, effective worker’s compensation program, and our state’s proactive approach to occupational safety and risk reduction is key to the program’s success,” Department of Workforce Development (DWD) Secretary-designee Caleb Frostman said. “Workplace safety takes strong partnerships between employers, workers, training providers and other stakeholders, and in Wisconsin, we are fortunate to have so many entities working cooperatively on this front.”

Worker’s compensation rates are adjusted annually by a committee from the Wisconsin Compensation Rating Bureau (WCRB). The committee analyzes and submits a rate recommendation to the Office of the Commissioner of Insurance (OCI) for final approval. While the overall rate will decrease by 8.84%, the impact will vary based on type of work performed.

“I am pleased to see another significant decrease in Worker’s Compensation rates going into 2020,” Wisconsin Commissioner of Insurance Mark Afable said. “The frequency of workplace injuries has been trending downward, which is a major driver of the rate reductions. This is definitely good news for Wisconsin businesses and workers.”

Wisconsin’s economic data demonstrates plenty of reasons to be optimistic. The state last year posted its best year of GDP growth since 2010, unemployment has regularly been at or below 3%, and the number of people working has been at or near record levels.

Wisconsin’s economy, however, tends to follow the trend of the national economy, which is now in its longest expansion on record. So is the state exceeding its growth expectations given the national environment, or are the record numbers the result of riding the country’s coattails?

The answer depends on the metric in question.

One area where Wisconsin has diverged from national trends is in labor force participation. Employers point to the state’s low unemployment rate as a reason for slower job growth, but Kurt Rankin, an economist and vice president with the PNC Financial Services Group, said the low rate is being sustained by labor force declines.

Since reaching its most recent peak of 68.5% in mid-2017, Wisconsin’s seasonally adjusted labor force participation rate has fallen 1.2 percentage points to 67.3% in May. The shift equates to more than 24,000 people leaving the state’s workforce.

An aging workforce and retiring baby boomers would seem to explain the decline, but Rankin said that is not the case nationally.

“Unless Wisconsin is bucking the national trend, which I doubt … older workers, by and large, are choosing to remain in the workforce,” he said.

State Senator Howard Marklein (R-Spring Green) and nine Republican Senators sent a letter to Wisconsin Department of Transportation (DOT) Secretary-Designee Craig Thompson to encourage him to spend the $75 million in the State Budget that was meant to fund local road improvement on – local roads – as they intended.

“The Senate Republicans worked hard to create a local road funding package for the state budget that would have a strong, meaningful, immediate impact on our local roads,” Marklein said. “Our constituents told us that this is one of their top priorities and we responded with a thoughtful, strong investment.”

“We started with $133 million for local roads, which was then compromised to $90 million to be divided among the towns, counties, cities and villages for local road maintenance and repair. This is what the legislature passed in our budget.”

“Unfortunately, Governor Tony Evers shaved $15 million off of these dollars and further vetoed all of the language to direct the funding to local roads. We have been concerned that the DOT will not spend the remaining $75 million on local roads. The letter we sent today clarifies the legislative intent of our votes on the state budget and encourages the DOT to follow-through with this strong investment to fix our local roads.”

“People throughout the state told us that they want their roads fixed. The legislature answered this call with a big investment that would send the money to projects that will matter to the people we serve. We have asked the DOT to honor this commitment and follow-through. We are optimistic that they will.”

Governor Tony Evers will lead a trade mission to Japan from Sept. 6-14 as part of the state’s efforts to expand exports by Wisconsin companies. This will be the first trade mission of his new administration.

“This mission provides an excellent opportunity to establish the personal relationships that are so important to doing business in Japan,” Governor Evers said. “Japan is Wisconsin’s sixth-highest export destination, and our exports continue to grow. In just the first quarter of this year, exports from our state to Japan rose by 11% over the same period last year.”

The mission will be coordinated by the Wisconsin Economic Development Corporation (WEDC), the state’s lead economic development organization. The trip will include visits to Tokyo, Yokohama and Chiba City. Governor Evers will also attend the Midwest U.S.-Japan Conference.

Wisconsin exported $734.3 million worth of goods to Japan in 2018. Top Wisconsin exports to Japan include industrial machinery, which grew 44% alone in the first quarter of this year; medical and scientific instruments; electrical machinery; and prepared meat and seafood products.

The registration deadline is July 26. To learn more or register, please visit https://wedc.org/ japan19.

Wisconsin foreclosure rates are the lowest the state has seen in nearly two decades, according to a researcher who tracks foreclosures.

Russell Kashian, economic professor at the University of Wisconsin-Whitewater, said the rates have dropped because of stricter lending criteria, more renters and high employment rates, Wisconsin Public Radio reported.

Kashian started tracking foreclosures in 2008 in order to identify hot spots in Wisconsin. Milwaukee County had one of the highest foreclosure rates in the state, Kashian’s research indicates.

The research estimates that 36 to 55 foreclosures were filed per 10,000 people in Milwaukee County in 2009. A decade later, those numbers were 11 to 20 foreclosures filings per 10,000 individuals.

“The foreclosure rate has gone down considerably, to almost one quarter,” Kashian said. “It’s gone down greater in wealthier areas, and it’s gone down less in minority areas and less affluent areas.”

In 2019, there have been nearly 3,600 foreclosure filings in Wisconsin, Kashian’s research revealed.

President Trump on Friday sought to boost his renegotiated North America trade agreement during a speech to employees at a Wisconsin factory, as his top legislative priority faces an uncertain path through Congress.

Trump urged Congress to approve the USMCA “immediately” so that he could sign it into law. He encouraged lawmakers to view the new trade agreement as a “bipartisan bill” before attacking House Democrats over ongoing investigations into his administration.

While Mexico has ratified the USMCA and Canada has taken steps to approve aspects of the deal, the pact has stalled in Congress as House Democrats push for additional assurances on environmental and labor protections.

Trump administration trade officials have praised Speaker Nancy Pelosi (D-Calif.) for her collaboration in working through changes to the legislation, but time is running out if lawmakers are to approve the trade deal before the end of the year.

Congress is unable to vote on the pact until the White House sends the implementation legislation, and CNBC reported that the White House is likely to send the USMCA to Congress after Sept. 1.

The federal deficit rose to $747 billion over the past nine months, a 23 percent increase compared to the same period in the previous fiscal year, according to Treasury figures released Thursday.

The Treasury Department said in the same report that the deficit is expected to exceed $1 trillion by Sept. 30, the end of the fiscal year. Revenue was up 2.5 percent, failing to keep pace with the 6.6 percent rise in outlays.

While the largest spending categories remained Social Security, defense, Medicare and health, the sixth-highest expenditure was for servicing the debt.

The amount spent on net interest was also the fastest growing category, increasing 16.4 percent, nearly twice as fast as defense spending and well above increases for Medicare, health, and Social Security.