Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day Dennis Winters Chief, Office of Economic Advisors Department of Workforce Development October 20, 2011 State of Wisconsin’s Economy Wisconsin Freight Rail Day 2011

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day FIRST OF ALL, YOU NEED TO UNDERSTAND WISCONSIN’S ECONOMY

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day  G.D.P. Grows at Tepid 1.9% Pace Despite Stimulus The New York Times, July 31, 2008  U.S. Economy Grows at Solid Pace in 2nd Quarter Washington Post, July 31, 2008  Yes, Virginia, It is a Recession Business Week, July 31, 2008  Still on the right road – The American economy has often defied predictions of its demise. It has done so again. The Economist, July 31, 2008 CONFUSED? NO WONDER WHO DO YOU BELIEVE

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day CONFUSED? NO WONDER WHICH DO YOU BELIEVE Home price dip extends to 4th month 9:20am: Case-Shiller index declines 0.4% in January as market recovery appears to have stalled. CNN, March 30, 2010 Home Prices in 20 U.S. Cities Unexpectedly Climb 0.3%, Case-Shiller Says Home Prices in 20 U.S. Cities Unexpectedly Climb 0.3%, Case-Shiller Says,Home prices in 20 U.S. cities unexpectedly rose in January, indicating the housing market is stabilizing as the economy expands. Bloomberg, March 30, 2010

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day INDUSTRIAL PRODUCTION RISES FOR FOURTH MONTH INDUSTRIAL PRODUCTION IN THE U.S. UNEXPECTEDLY ROSE IN AUGUST, SIGNALING MANUFACTURING WILL SUPPORT THE WORLD’S LARGEST ECONOMY. Bloomberg, September 14, U.S. JOBLESS CLAIMS ROSE TO HIGHEST SINCE JUNE APPLICATIONS FOR U.S. UNEMPLOYMENT BENEFITS UNEXPECTEDLY ROSE LAST WEEK TO THE HIGHEST LEVEL SINCE THE END OF JUNE, UNDERSCORING THE RISK OF FURTHER WEAKNESS IN THE LABOR MARKET. Bloomberg, September 14, CONFUSED? NO WONDER WHAT DO YOU BELIEVE

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day TIMING IS EVERYTHING “We hope to become manifestly, aggressively, stunningly bullish of equities,” Dennis Gartman, hedge fund manager and author of The Gartman Letter, said in his Monday commentary. “Until then, we are sellers of rallies.” –USA TODAY, October 8, 2011.

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day GDP DJIA JOBS HOW DO YOU SPELL RECOVERY?

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day Source: Bureau of Economic Analysis, OEA WHAT IS RECOVERY? GDP; Eight positive quarters, Q2 up 1.3%

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day Source: BEA, OEA BUSINESS CYCLE SEVERE STILL NOT RECOVERED AFTER EIGHT QUARTERS

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Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day Source: Wisconsin Department of Revenue RETAIL SALES USING THE APPROPRIATE ADJUSTMENTS

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day HOUSING STARTS FLAT AT BEST Source: U.S. Census, OEA

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day RAIL MOVEMENTS EVEN WITH LAST YEAR

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day WHAT IS RECOVERY? DJIA; UP 77% SINCE MARCH 9, 2009 Source:

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day CORPORATE PROFITS LOOK HEALTHY MOSTLY DUE TO COST CUTTING

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day MANAGING RISK WHERE IS THE INCENTIVE TO EXPAND

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day PRODUCTION CAPACITY PEAKED?

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day INVESTMENT GROWTH IS IN PRODUCTIVITY, NOT EXPANSION Source: BEA, OEA

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day Source: Federal Reserve Board, Data Download Program EXTENDING CREDIT BANKS ARE CONSTRICTED TO LEND FUNDS

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day WHAT IS RECOVERY? JOBS; STILL DOWN 120,000 Source: Bureau of Labor Statistics, LMI, OEA

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day JOBS RECOVERY HOW IS THIS ONE NOT LIKE THE OTHER ONES Source: Bureau of Labor Statistics, LMI, OEA

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day JOB RECOVERY WILL TAKE TIME, BUT THINGS ARE TURNING UP Source: BLS, OEA

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day Source: BLS, DOR, OEA ♦ Blue is history (CES SA, December 2010 is benchmark, 2,317,200). ♦ Orange is DOR forecast (quarterly then annual, Spring 2011 Outlook). ♦ Yellow is 250,000 goal for December 2014 (2,567,200).

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day  Recovery is self-sustaining, but fragile.  Employment may breach in  Strength of recovery subject to consumer income and wealth uncertainty. Risks  High unemployment dampens income growth.  Prolonged high gasoline prices sap consumption.  European Union fiscal problems wash over the global financial markets. IN CONCLUSION CONTINUED RECOVERY, BUT FRAGILE

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day Questions ?

Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day Dennis Winters Phone: Website: OEA website: CONTACT INFORMATION