We’re just 10 days into 2016, so the new year is still an infant crying to be adopted by a nurturing economic forecast. Here are a few prognostications and trends to watch:
■You can’t create jobs without workers to fill them. Demographics don’t tilt in Wisconsin’s favor these days. The state is slightly older than the U.S. average and its in-migration rate is low. Wisconsin must do more to attract and retain the vaunted (and sometimes maligned) millennials, who will make up half of the U.S. workforce by 2020.
In a recent online survey of people who live outside Wisconsin, a business-led coalition heard from nearly 700 people who live outside our borders — including more than 200 who are millennials, or people under 35 who came of age around the turn of the century.
Read this commentary in the Milwaukee Journal Sentinel here.
The good news: Wisconsin is a blank slate for most of them. Even so, their overall image of the state as a place to live, work and play is high — as evidenced by strong scores for cost of living, crime and public safety, quality of education, access to recreation and the outdoors. Live and play matter to millennials as much as work.
The bad news: They don’t think they can find jobs here … at least, not jobs that pay well.
Young people at home or beyond need to hear Wisconsin has many strong business sectors. Those include software, Internet publishing and telecom; architecture and engineering; arts and design; computer and information technology; life, physical and social sciences; and finance and insurance. Some emerging projects in Milwaukee and the Fox Valley are helping get out the word.
■Paychecks are likely to get bigger. With a state unemployment rate of 4.2%, more baby boomer retirements on the horizon and Wisconsin businesses straining to find or keep workers, the law of supply and demand will be enforced by the wage-and-salary cops in 2016.
A mix of wage and salary statistics, from payroll processors, private analysts, recruiters and the Federal Reserve, suggest 2016 will be a breakout year for wage growth. Many workers will say “it’s about time,” as wages and salaries have not matched inflation for years.
The continued growth of the “gig” economy, also known as the sharing economy, plays into wage growth, as well. As more people work for themselves or through Uber-like settings, the competition for talent will intensify.
■Angel and venture capital deals nationally will cool. That’s mainly because the past three years have been so hot, especially on the venture capital side of the ledger. “First financings” were down in 2015, mainly in the latter half of the year, as measured by the number of early stage deals and dollars involved. So were the number of “exits,” generally defined as the sale of a young company or an initial public offering of stock. Exits are crucial because much of the money gets reinvested in other deals.
Some of the cooling in the tech markets is tied to governments trying to strangle the golden goose. The rise of the Internet has kept the U.S. economy strong and innovative, yet there are repeated efforts to tax or regulate the very companies — large and small — behind that boom.
Wisconsin can buck the national trend. The last few years were a bit frothy in U.S. early stage markets, with company values scraping the stratosphere of investor risk. Meanwhile, company valuations in Wisconsin remained closer to Earth. There are more early stage investor networks and funds in Wisconsin than ever; more support for young companies and entrepreneurs; and more curb appeal for investors outside the state.
Wisconsin legislators have a chance to keep the momentum rolling with pending bills that make it easier for young state companies to attract early financing rounds.
■Uncertainties may yield to optimism. For now, there’s a long list of anxieties: China’s cooled economy, higher interest rates, weaker manufacturing indexes, a flat stock market and unrest in many corners of the world.
It’s important to remember China is still growing at single-digit rates vs. double digits — and there are other emerging markets for U.S. goods and products. Higher interest rates were baked into most business plans months ago, and the effect on lending will be gradual and perhaps welcome in many sectors. Wisconsin manufacturers are more efficient than ever, thanks in no small part to technology, and they’re doing a better job of cracking foreign markets despite the strong dollar.
In a world that seems increasingly divided and violent, where will the smart money flow? To stable democracies such as the United States and its allies. While the presidential campaign has produced some notably unstable moments and personalities, the process that culminates Nov. 8 should renew confidence in the nation’s ability to roll with the punches.
So far, the 2016 economy is a colicky baby with wet diapers. With 355 days to go, let’s hope it grows out of both.