MADISON — While the Madison-area economy has recovered nicely since the Great Recession, the state’s overall economy lags behind the rest of the U.S., according to Steve Deller, agricultural economist at UW-Madison. Deller offered predictions for the state economy late last month during the Wisconsin Agricultural Outlook Forum in Madison.
“The state is not very dynamic right now,” he said.
On the overall U.S. economy, he said, “we’re continuing to grow but at a very slow rate. We could start ticking down — but not a recession — because interest rates will start increasing.”
Deller said three-fourths of the jobs generated in Wisconsin since the recession have been in the Madison area. The state’s unemployment rate has dropped, following the national trend, and sits at about 3 percent. This, however, does not include the underemployed, or those working jobs below their potential, he said. Deller said more than half of the state’s manufacturing jobs could potentially be replaced by automation.
“A lot of the growth is coming from self-employment,” he said.
Wisconsin continues to be heavily reliant on its “legacy industries,” including agriculture, he said, and the state’s overall level of entrepreneurship is low. The state Gross Domestic Product has been on the rise and is expected to reach about 2.7 percent this coming year, he said, but it’s not generating the expected jobs or entrepreneurship activity. Farm proprietorship, as well as the local foods movement, seem to have plateaued.
Wisconsin agriculture’s GDP has been increasing, Deller said, but so far, that has not been associated with job growth. A lot of the growth in Wisconsin agriculture seems to be coming from exports, mostly dairy and soybeans. Two-thirds of the Wisconsin agriculture industry is involved in food processing, mainly cheese production.
What keeps many economists awake at night is income distribution, as 80 percent of income growth is seen in the top 1 percent of earners, Deller said. “A lot of the growth occurring is going to high-income folks, and we’re generating a lot of low-paying jobs. There is concern, and it’s not sustainable.”