The Sconi

A new survey of Wisconsin businesses indicates a sustained negative outlook for the economy. According to the Wisconsin Employer Survey, only 23 percent of businesses rate the Wisconsin economy as strong, nearly identical to results from six months ago but significantly lower than the 39 percent recorded in last summer’s survey.

The forward-looking data raises additional concerns as three-fifths of employers expect the Wisconsin economy to remain flat or decline over the next six months. Two-thirds anticipate similar trends for the U.S. economy.

Much of this pessimism is driven by higher costs. When asked about their top economic challenge, 35 percent of businesses cited inflation, followed by workforce shortages at 25 percent and health care costs at 16 percent.

Wisconsin Manufacturers & Commerce (WMC), a combined state chamber and manufacturers’ association, conducted the survey over the first three weeks of July on various topics. WMC released data focused specifically on the economy on Monday.

“Higher costs are putting pressure on everyone right now,” said WMC President & CEO Kurt R. Bauer. “Unfortunately, that means businesses and families have to make tough decisions that have a negative impact on our economy.”

Survey respondents reported significant price increases over recent years. Since January 2021, 57 percent have seen costs rise by over 20 percent, with one in five employers experiencing cost increases exceeding 30 percent.

As the Federal Reserve has raised interest rates to combat historic inflation, investment has slowed. Nearly half—44 percent—of Wisconsin employers say they have delayed or reduced project sizes or capital expenditures due to higher interest rates.

Hiring is also slowing down. Eighteen months ago, 60 percent of businesses planned to increase their number of employees; this summer’s survey shows only 39 percent plan to hire more workers—a drop of 21 points.

This reduction in hiring aligns with fewer businesses struggling to hire. The workforce shortage issue has seen a downward trend since peaking close to 90 percent recently; currently, 68 percent report having trouble hiring employees.

“There is no question that the mix of higher costs and higher interest rates are making employers rethink investment and hiring plans,” added Bauer. “While we may not enter into a typically defined recession, this data shows that the economy may stagnate at least through the end of the year.”

Additional data points reveal that wages for most employees are expected to increase by three to four percent in 2024 and that skilled labor positions are most in demand among companies facing hiring challenges.

The Wisconsin Employer Survey is conducted twice annually by WMC and provides insights into where Wisconsin’s employers stand on key issues while outlining their economic outlook for both Wisconsin and the United States. For Summer 2024 edition, WMC surveyed 182 employers representing its membership across various sizes, industries, and geographic locations within Wisconsin.

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