–submitted by Rick Kiley; photo by Karl Wellensiek
Our guest speaker this week was Rick Mattoon, Senior Economist and Economic Advisor for the Federal Reserve Bank of Chicago. Mr. Mattoon’s talk, “U.S. and Wisconsin Economic Outlook for 2015”, reviewed the current state of our national and local economy as it emerges from the Great Recession of 2008-2009.
The past year has seen the strongest GDP growth since the recession, with second and third quarter growth of 4.6% and 5%; however, this growth is weaker than the recoveries following the recessions of 1981-1982 and 1974-1975. This slow recovery reflects a variety of conflicting trends. For example the oil price collapse of approximately 50% has generated a $550 annual household benefit, but wage gains are modest; employment has reached prerecession levels, but increases in wealth are the result of stock market gains, so household wealth increases are unevenly shared.
There are a variety of factors to watch in 2015 that will influence the near future. Examples include a number of states increasing minimum wages, the prospect of continued growth of construction spending after several years of below average investment.
With regard to Wisconsin, the southern part of the state is closely tied to the economy of the Chicago area, which has underperformed national growth. And, while personal income in the state has recovered well, only half the jobs lost in the recession have returned. The business climate in the state is generally positive, about the middle of the pack among the states.
Mr. Mattoon concluded saying the U.S. economy has good momentum and should have GDP growth in the coming year approaching 3%. Wisconsin, however, has made slower progress since the recession. Our biggest challenge as a nation will be weak international markets as a result of their slower growth and the strength of the dollar.