MADISON – A new survey of Wisconsin businesses found that economic optimism is quickly waning, driving fears of an upcoming recession. According to the Wisconsin Employer Survey, 71 percent of businesses believe that the state’s economy will enter a recession within the next 12 months. Four in 10 of those surveyed expect a recession before the end of the year.
Wisconsin Manufacturers & Commerce (WMC) — the combined state chamber and manufacturers’ association — conducted the survey over the last three weeks of June on a variety of topics. On Wednesday, WMC released data focused specifically on the economy.
“Businesses continue to be hit hard by ever-increasing costs and perpetual supply chain challenges,” said WMC President & CEO Kurt R. Bauer. “These issues are driving Wisconsin employers to be deeply concerned about the prospect of a slowing economy.”
When asked to rate the Wisconsin economy, 44 percent of respondents said it was strong – a 14 point drop from one year ago. Forty-seven percent rated the state’s economy as moderate and nine percent said it was weak. The national economy fared even worse. Only 26 percent of employers believe the U.S. economy is strong, while half rate it as moderate and 27 percent say it is weak.
Looking forward, businesses are pessimistic about the economy. A year ago, 84 percent of Wisconsin employers said the state economy would grow. That number dropped to 65 percent in the Winter 2022 survey, and it sits at just 45 percent today. In fact, a majority – 55 percent – believe Wisconsin’s economy will remain flat or decline over the next six months.
According to the survey, Wisconsin businesses are even more concerned about the national economy. Three in 10 companies believe the U.S. economy will grow over the next six months, and a plurality – 39 percent – think it will decline. Just six months ago, only 12 percent of Wisconsin employers thought the national economy would contract.
Inflation looks to be speeding up, as well, according to the Employer Survey. Two-thirds of Wisconsin businesses have seen their costs go up by more than 10 percent in the last six months. That is 20 points higher than just six months ago when less than half had seen double-digit price hikes.
“Unfortunately, prices are increasing faster now than they were just six months ago,” added Bauer. “With businesses paying even more, consumers are next up to be hit with these higher costs.”
The survey also found that roughly half of businesses have seen energy costs go up by more than 10 percent and a third have seen health care costs go up by the same amount. When asked when inflation could be back under control, six in 10 businesses said it would not be until 2024 or later. Fifty-four percent predicted it would take just as long to fix the current supply chain issues plaguing the economy.
The Wisconsin Employer Survey is conducted twice a year by WMC. The assessment provides a snapshot of where Wisconsin’s employers stand on a number of important issues and outlines their economic outlook for both Wisconsin and the United States. For the Summer 2022 edition, WMC surveyed 216 employers that make up a representative sample of its membership. Businesses of all sizes, industries and geographic locations in Wisconsin participated.
The survey will be released in three separate reports on topics including: the economy; workforce; and public policy.