IB 100: Quarterly Review

IB partnered with Chamberlain Research Consultants to poll a pre-selected group of 100 companies on the state of the economy. Snapshot: We’re not as enthusiastic or optimistic this month as last. Given events in Europe and the oil spill, that might be anticipated, but it is disheartening to see another plummet. Financial expert Michael Dubis weighs in on the latest survey results.

The Economy

Stock markets seem to have settled quite a bit since the Spring. If you look at run up since March 2009, the stock market has rebounded almost as statistically significant as the 2008 – 2009 crash. This is remarkable. That said, the start of summer has clearly shown there is a tremendous amount of ambiguity in the world capital markets: Volatility has spiked and markets have corrected 5% to 10% off the April/May peaks.

Unemployment continues to be a major problem. The recent unemployment report from May showed jobs added, but the large majority of those jobs were temporary. Real private sector jobs were abysmal. In order for economic recovery to occur, jobs will need to be created. There appears no sign of that anytime soon.

Furthermore, housing starts are essentially dead. Locally, in areas like Middleton, it appears sales are stable if not strong, but nationwide, clearly the stimulus was the primary driver behind the increase in housing sales and now that it’s over, the housing market appears hurt.

Local Review

Our monthly surveys continues to show no one is exceptionally excited about the local or national economies. Most notably, from April to June, we saw what I would deem a dramatic drop in the confidence of the economy in Dane County. Not a single person surveyed considered Dane County to be in excellent condition, whereas just two months ago, roughly 10% to 15% did. At the same time, the surveyed “fair” increased quite a bit.

We are also seeing a trend line of revenue decreases, expenditure increases, and staffing decreases. If these signals are universal in the county, this does not bode well for the local economy.

Summary

Across the question spectrum, respondents have become discouraged.

• Local economy viewpoint has trended downward for almost a year.
• National outlook continues to look fair to poor overwhelmingly.
• It appears our current economic picture is dipping as well.
• Revenues are dipping.
• Staffing is either saying the same or decreasing.
• Expenditures are increasing.

This does not bode well. Our respondents offer a fair mix of major industries and governments in Dane county. They are key creators of jobs, wealth, and charity. In an area like Dane county, so directly or indirectly dependent on just a few major employers, coupled with our egregious tax system in this state, a trend-line like this could mean more of what we saw in 2008 and 2009.

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