A new survey of Wisconsin businesses conducted in July by Wisconsin Manufacturers & Commerce shows economic pessimism fueled by high costs.
According to the most recent Wisconsin Employer Survey, only 23% of businesses rank the Wisconsin economy as strong — nearly identical to the results six months ago. That number, however, is significantly lower than the 39% that rated the economy as strong in last summer’s survey.
The forward-looking data raises additional concerns as three-fifths of employers say they expect the Wisconsin economy to remain flat or decline over the next six months. A full two-thirds expect the U.S. economy to do the same.
Much of the pessimism is being driven by higher costs. When asked what the top economic challenge facing their company is, the top answer by far was inflation. Thirty-five percent of businesses ranked it as the top issue, followed by the workforce shortage at 25% and health care costs at 16%.
Survey respondents explained that prices have significantly increased over the last few years. Since January 2021, 57% have seen costs increase by over 20%. One in five employers have seen costs go up by more than 30%.
As the Federal Reserve has raised interest rates to combat this historic inflation, it has slowed investment. In fact, nearly half — 44% — of Wisconsin employers say they have delayed or reduced the size of a project or capital expenditure because of higher interest rates.
At the same time, hiring is slowing. Just 18 months ago, 60% of businesses said they planned to increase their number of employees. This summer’s survey shows only 39% plan to hire more workers — a 21-point drop.
The reduction in hiring matches with a drop in the number of businesses struggling to hire. What was once a front-burner issue for most businesses — the workforce shortage — has seen a downward trend since 2023. When asked if they are having trouble hiring employees, 68% said yes — a number that peaked close to 90% just a short time ago.
Additional data points show that wages for most employees are expected to increase by 3–4% in 2024 and that skilled labor positions are the most in demand for companies struggling to hire.
