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The winds of economic and political change are blowing


David P. Werner
President and CEO
Park Bank

 

Dr. Mike Knetter, president and CEO of the University of Wisconsin Foundation and Alumni Association, recently spoke at an event we hosted for our customers.  Having served as an economic advisor for former presidents George H.W. Bush and Bill Clinton, he shared insights from his unique perspective into the emerging national trends that will play a role in the state’s economy this year.

Below are highlights of Mr. Knetter’s presentation, click here to view the entire slide presentation.

2017 national economic trends forecast:

  1. Increase in consumer confidence
    • Expectation of pro-business administration
    • Favorable economy near full employment
    • Competition and consumers more trusted than regulators
  2. Tax reform
    • Low to modest expectations due to the level of difficulty to pass Congress
    • Reduction in corporate taxes might keep more production in the U.S.
  3. Infrastructure spending
    • Could boost short-term demand and expand economy’s long-term supply capability
    • Roads, bridges, rail systems, ports and airports all need improvements
    • Wall building could boost blue-collar employment
  4. Border policy
    • Aggressive trade policy, while popular with many, would be a negative supply shock to the economy
    • Prices would increase in the short-term with little change in supply
    • Domestic production would replace imports at higher prices long-term, crowding out production of things currently exported

What this means for Wisconsin:

  1. New direction in regulation enforcement will create positive economic momentum
  2. Any tax reform changes are favorable for Wisconsin businesses
  3. Infrastructure programs will help in specific states and regions, but it is not likely that Wisconsin would see much in federal infrastructure dollars given the projects currently under discussion (e.g., border walls)
  4. While the aggressive approach to border policy is partially aimed at bringing manufacturing jobs back to the U.S., it’s unlikely Wisconsin will benefit as new manufacturing businesses are frequently locating in warmer states with fewer regulations
  5. With manufacturing in Midwestern states in decline for about 40 years relative to the rest of the nation, Wisconsin should look to gaining economic strength through innovation and developing its share of leading-edge tech firms and products that require more educated and skilled workers, raising the level of wages and standard of living.

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