1. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 1 Dennis Winters Chief, Office of Economic Advisors Department of Workforce Development October 20, 2011 State of Wisconsin’s Economy Wisconsin Freight Rail Day 2011

2. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 2 FIRST OF ALL, YOU NEED TO UNDERSTAND WISCONSIN’S ECONOMY

3. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 3  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

4. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 4 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

5. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 5 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, 2011 http://www.bloomberg.com/news/economy/ 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, 2011 http://www.bloomberg.com/news/economy/ CONFUSED? NO WONDER WHAT DO YOU BELIEVE

6. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 6 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.

7. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 7 GDP DJIA JOBS HOW DO YOU SPELL RECOVERY?

8. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 8 Source: Bureau of Economic Analysis, OEA WHAT IS RECOVERY? GDP; Eight positive quarters, Q2 up 1.3%

9. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 9 Source: BEA, OEA BUSINESS CYCLE SEVERE STILL NOT RECOVERED AFTER EIGHT QUARTERS

10. Source: http://seekingalpha.com/article/115525-the-scariest-chart-ever?source=article_sb_popular

11. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 11 Source: Wisconsin Department of Revenue RETAIL SALES USING THE APPROPRIATE ADJUSTMENTS

12. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 12 HOUSING STARTS FLAT AT BEST Source: U.S. Census, OEA

13. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 13 RAIL MOVEMENTS EVEN WITH LAST YEAR

14. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 14 WHAT IS RECOVERY? DJIA; UP 77% SINCE MARCH 9, 2009 Source: http://moneycentral.msn.com/investor/charts/chartdl.aspx

15. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 15 CORPORATE PROFITS LOOK HEALTHY MOSTLY DUE TO COST CUTTING

16. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 16 MANAGING RISK WHERE IS THE INCENTIVE TO EXPAND

17. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 17 PRODUCTION CAPACITY PEAKED?

18. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 18 INVESTMENT GROWTH IS IN PRODUCTIVITY, NOT EXPANSION Source: BEA, OEA

19. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 19 Source: Federal Reserve Board, Data Download Program EXTENDING CREDIT BANKS ARE CONSTRICTED TO LEND FUNDS

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

21. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 21 JOBS RECOVERY HOW IS THIS ONE NOT LIKE THE OTHER ONES Source: Bureau of Labor Statistics, LMI, OEA

22. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 22 JOB RECOVERY WILL TAKE TIME, BUT THINGS ARE TURNING UP Source: BLS, OEA

23. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 23 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).

24. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 24  Recovery is self-sustaining, but fragile.  Employment may breach in 2014.  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

25. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 25 Questions ?

26. Wisconsin is Open for Business October 20, 2011 Stateof Wisconsin’s Economy Wisconsin Freight Rail Day 2011 26 Dennis Winters Phone: 608-267-3262 Email: dennis.winters@dwd.wisconsin.gov Website: www.dwd.wisconsin.govwww.dwd.wisconsin.gov OEA website: www.dwd.wisconsin.gov/oeawww.dwd.wisconsin.gov CONTACT INFORMATION