24 Jun The economy has come roaring back – or is that roar just a purr?
MADISON – I hereby declare the economic downturn in Wisconsin to be over.
You don’t believe me, you say? Well, I guess I’m not surprised. But allow me to sing a chorus of “Happy Days Are Here Again” before I remind you why you’re still a bit skeptical.
A pile of available evidence proclaims that Wisconsin’s economy is back. Consider the following:
The state’s unemployment rate fell to 4.8 percent in May, down from 5.1 percent in April. Statistics collected by the state Department of Workforce Development show Wisconsin added 41,000 private-sector jobs between May 2003 and last month, including 4,100 in the once-beleaguered manufacturing sector. That’s more new jobs than were produced in any neighboring state during the same period.
Construction activity, which is often a harbinger of a robust economy, is growing by leaps and bounds. There were $11 billion worth of construction starts in Wisconsin between May 2003 and April 30, 2004, according to McGraw-Hill/Dodge. That’s the first time building totals have hit that level since 2001. In April, the number of hard-hats employed in Wisconsin hit 121,600, the highest level ever for that month, and grew to 129,100 in May.
Wages in Wisconsin are still below the national average, but they’re growing faster than in other Midwestern states, according to the U.S. Bureau of Labor Statistics. The report, based on 2002 data, showed Wisconsin’s average wages were about 11.6 percent below the national average of $36,764. However, Wisconsin wages grew by 3 percent over the previous year.
Employers across a broad spectrum of industries are reporting that business is brisk, orders are up and that people are once again buying things. That tracks with national figures, which showed that big-industry production surged by 1.1 percent in May. That was the biggest gain since August 1998.
Not convinced? You’re not alone. Despite the mounting evidence that a national and statewide recovery is well under way, there’s still a lingering sense that the proverbial “other shoe” could fall at any time. Here are some factors that are keeping people from dancing in the streets.
Deep down, everyone knows that manufacturing employment will never reach the levels Wisconsin once enjoyed. Even if total factory jobs in Wisconsin hit 510,000 by the end of the year, that’s still far short of the all-time high of 599,100 jobs in August 1999. New processes and techniques have permanently downsized manufacturing; jobs moved overseas are only a fraction of the loss.
The days of cheap gasoline may be over for good. With the price of regular gasoline hovering close to $2 per gallon, consumers in the United States and Wisconsin have tasted what the rest of the world has swallowed for years. As other economies grow, particularly in Asia, the demand for petroleum products is growing, too. That increases global prices – and erodes what was once a “cheap gas” advantage for the U.S. economy.
Despite the coming transfer of power to a provisional Iraqi government, many Americans are still unnerved by the war in Iraq. They understand that progress is being made there – schools, roads, hospitals and power plants are slowly being built are coming back on line – but there’s still great uncertainty. Even if the Iraqis throw rose petals at our feet for the long march home, there’s still the reality that al-Qaida is alive and well, plotting its next hit.
Federal deficits are back. The budget deficit is projected to come in this year around $400 billion, and is expected to grow as the demographics of the aging “Baby Boom” generation put more pressure on Social Security and Medicare. Americans consume more than they produce and save, a separate measure which is called the “account deficit.” Last year, at more than $500 billion, the account deficit was equal to 5 percent of the nation’s annual economic output. As Federal Reserve Board chairman Alan Greenspan has warned, “The free lunch has still to be invented.”
The economy is back, for now, but there are some clouds inside those silver linings. Some fundamental changes must be made before everyone can sing “Happy Days” down to the last verse.
Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.
The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.