Wisconsin Economic Summit | 10.05.10

Money makes the world . . .

Wisconsin Economic Summit | 10.05.10

Money makes the world . . .

■ “Big picture”: Trends and strategic position

■ Employment: Job trends

■ Paying Employees: avg. wages

■ Employers: Creating new firms?

Overview

Economy

Revenues

Budgets

?“It is the economy, stupid.”

- Campaign ‘92

-7.4%

-2.6%

-0.1%

-6.1%

-8%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

1980 1984 1988 1992 1996 2000 2004 2008

WI

Per Capita Personal Inc.: Wis. +/- US

> US

< US

Economist’s view

1.93%

1.90% 1.86%

1.77%

2.08%

1.77%

1.87%

1.70%

2.10%

1.50%

1.75%

2.00%

2.25%

1963 1971 1979 1987 1995 2003

MN

WI

Wis. % of US GDP

Marketer’s view

66.665.0

69.6

57.1

59.559.359.3

54.5

40

50

60

70

85 90 95 00 05

Wis.

U.S.

How did we manage in the 90s?

% Women working

96.7

99.8

3.0

90

92

94

96

98

100

102

104

106

2000 2002 2004 2006 2008 2010

0.0

1.5

3.0

4.5

6.0

7.5

9.0

10.5

12.0

US - WI difference

US

WI

Mfg. Jobs 6/07-6/10WI -14.8%-75KUS -16.1 -2,246KTot. Nonfarm 6/07-6/10 WI - 6.0% - 173KUS - 5.3 -7,236K

Closer look . . . jobs

Avg. Earnings/Worker & GDP/Worker (WI % < > US)

-3.8%-6.2%

-12.9%

-10.9%

-13.2%

-12.7%

-14.8%

-5.0%

-20%

-15%

-10%

-5%

0%1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008

Productivity:GDP/Worker

Avg. Earnings/Job

. . . wages and productivity

$45,823$43,992

$40,225$38,350$38,916$38,032

$36,723$37,146

$33,633

$36,195

$39,249$39,798

$30,000

$35,000

$40,000

$45,000

$50,000

Real wages growing, but slower

WI

US

U.S. Wis. E/I

Paper Manuf. -32.4% -28.9% Exp

Machinery Manuf. -16.3% -12.0% E

Elec. Equip./Appliance Manuf. -31.4% -21.3% E

Printing and related -28.8% 12.6% E

Fabricated Metal Prod. Manuf. -3.1% 14.0% E

Nonstore Retailers -7.9% 6.9% E

Wood Product Manuf. -15.1% -3.9% E

Plastics/Rubber Prod. Manuf. -6.7% 18.7% E

Primary Metal Manuf. -34.9% -21.0% E

Food Manuf. -2.4% 3.0% E

Wisconsin's Top 10 "Key" Industries

Where are our jobs?

1990-2009

Where aren’t our jobs?

Social Assistance 104.4% 156.6% ~Exp

Warehousing and Storage 95.9% 156.7% Imp

Ambulatory Health Services 87.3% 68.0% I

Admin. and Support services 78.9% 98.6% I

Museums/Hist. Sites/Zoos/Parks 78.4% 138.9% I

Educational Services 78.0% 71.0% I

Admin. and Waste Services 75.8% 96.9% I

Amusement, Gambling, and Rec. 74.4% 50.6% I

Securities/Comm. Cont's/Invest's 70.3% 60.7% I

Prof., Sci., and Tech. Services 61.4% 51.9% I

Fastest Growing Industries Nationally

1990-2009

U.S. Wis. E/I

Sector WI US WI USAll 9.1% 7.6% -3.0% 5.2%

Construction 6.6% 9.0% -14.8% -1.7%Manufact'g -2.4% -8.1% -5.4% -3.7%

All - Const'n 9.5% 7.4% -1.5% 6.0%All - Manuf'g 10.1% 8.4% -2.9% 5.6%

05-0901-05

Pct. Change in No’s of Private EstablishmentsThird Quarter of Ea. Yr. Shown (BLS)

> v

Closer look . . . employers

1993-99 Rank 2005-09 Rank 2009:4 Rank

US 5.6 5.5 5.6WI 4.5 43 4.7 40 4.3 44

1993-99 Rank 2005-09 Rank 2009:4 Rank

US 1.8 1.2 1.2WI 1.4 43 1.0 44 1.0 38

New Firms as Pct. Of All Firms

Employees of New Firms as Pct. Of All Employees

Are we creating new firms?

Firm Creat'n

Rate Wis. U.S.Wis. Diff.

High Firm Creation

StatesWis. Diff.

Construction 7.9% 4.5% 5.6% -1.1% 6.4% -1.9%Prof./Bus. Serv. 6.9% 11.4% 15.4% -4.0% 13.9% -2.5%Information 5.9% 2.1% 2.6% -0.5% 2.6% -0.5%Trade/Trans./Util. 5.7% 22.6% 23.1% -0.4% 23.8% -1.1%Leisure/Hosp. 5.4% 11.1% 12.2% -1.0% 14.8% -3.7%Fin. Activities 4.7% 6.9% 7.1% -0.2% 6.5% 0.4%Educ./Health Serv. 3.7% 16.9% 17.1% -0.2% 16.9% 0.1%Manufacturing 3.0% 19.3% 11.0% 8.2% 8.7% 10.6%

Share of Private Employment

New firms . . . where?

<

>

1994-2009

-80

-40

0

40

80

-60 -40 -20 0 20 40 60

^ wyak

ny

vaca

de

tx

ma

IA

WI

MI

MN

ILms

scky

"Stars"

"Dogs"

ar|id

WI98

GDP % chg

GDP pc

In sum . . . subpar, subperforming

Who can help . . . state?

-2.46

-2.42-2.28

-1.27

-0.83

-1.21

-2.24

-1.93

-2.15

-2.44 -2.50-3.0

-2.0

-1.0

0.098 00 02 04 06 08 10e

■ GAAP deficits, bond ratings■ Weak growth dividend, structural “deficit”■ Recent tax changes and “success” psychology■ Risk aversion: job preservation, “job” focus

. . . universities?

■ Research, yes; but slow, probabilistic process■ More college grads, yes; but, nimbleness?

outmigration due to job lack, low wages■ . . . and job crowding and wage suppression?

■ “. . . US government debt held by the public has grown rapidly . . . it is now higher than it has ever been except during . . . World War II.”

■ “. . . deficits will cause debt to rise to unsupportable levels.”

Federal debt = 100% of GDP: 2020 - 2040

▪ Crowding out of private savings/investment ▪ Rising interest costs forcing program cuts▪ Higher marginal tax rates “would

discourage work and saving and further reduce output”

. . . Feds? (CBO, 7.27.10)

Takeaway?

New firms create new

jobs.Soul-searching questions for

Wisconsin.

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