Three industry experts and an economist shared their outlooks for 2024 at the annual
BizTimes Milwaukee Economic Trends event, held Thursday at the Italian Community Center.
Kicking off the event was a presentation by
University of Wisconsin Foundation chief executive officer and former White House economist
Michael Knetter. Despite a general feeling of uneasiness among the U.S. population, data shows the economy is in a stronger place than many may think, he said. Knetter pointed to unemployment rates, which have almost reached an all-time low when looking back at data over the past 63 years. This is due in part to a sizable return of workers to the labor force after the pandemic. Some older individuals may have returned to the workforce after realizing the money they had saved up for retirement no longer stretched as far as they needed it to, he said.
“It’s a really robust labor market right now,” said Knetter.
That strong labor market, combined with the Federal Reserve's efforts to get inflation back to its 2% target, will help the country avoid a recession, he said.
“When you ask consumers about their economic situation currently and moving forward, the vibe isn’t that bad,” said Knetter. “If you look at consumer sentiment, that’s a different indicator produced by the University of Michigan, that index had its largest two-month gain over the last two months. People have gotten a lot more confident.”
Knetter said ongoing geopolitical issues coupled with the upcoming presidential election have helped feed into the concerns that many Americans still have about the economy.
“When we’re putting forth candidates that are really far apart in their agenda and orientation, that creates an enormous amount of scrutiny,” said Knetter. “The uncertainty that surrounds any elections is very high – the outcome could be two very different policies."
Hiring in 2024
Businesses looking to hire this year may begin to see more of a market balance between employers and employees.
Lori Malett, president of
Hatch Staffing Services, said throughout the pandemic, the company worked with countless manufacturers who had backlogs and were simply trying to fill whatever positions they could.
Now, businesses can be a bit more selective. They have more bargaining power than at the height of the labor shortage. More positive news for businesses is far fewer people are looking to leave their companies – 57% now as compared to 80% in 2020.
“In December alone, we saw three different clients walk away from a candidate,” said Hatch. “We’re starting to see a balance of power, but please don’t become complacent with that. This is more of the year to make it more about a cohesive relationship and not who has the upper hand.”
Moving forward, flexibility in work schedules will continue to be key for companies looking to hire, but an in-office policy is not necessarily a dealbreaker. Malett said businesses that can introduce flex scheduling should do so. Hatch introduced a four-day work week with an option for flexible time during the workday.
“It’s removing distractions for your employees in the day-to-day,” she said. “They know at one o’clock, they can run out and do whatever they need to do.”
Strong training and development programs will also be important in recruiting and retaining talent.
“Our number one client is our internal staff so we really have to make sure we’re showing them that investment will be important,” said Malett.
Automation here to stay
Numbers don’t lie, and when it comes to the continually shrinking pool of graduating high school students across the country, there’s plenty of data that shows a demographic cliff will soon become a pressing issue for employers.
“Data points to this demographic fall happening at about 2025,” said
Richard Barnhouse, president and CEO of
Waukesha County Technical College. “What we know in higher education is the number of students available over the next decade is significantly less than it has been over time. This is a national issue.”
Barnhouse believes the best way to address this challenge is by using automation and artificial intelligence. As more businesses begin automating their processes, fewer companies are competing for employees who are becoming scarcer.
“We need to start thinking about this in terms of what’s good for everyone and I know that’s really tough in a business environment,” said Barnhouse. “If you automate, it’s good for others.”
WCTC is working to develop a unique accelerator program that will support startups in the field of AI. The college is also opening an AI-focused innovation center that will help businesses looking to implement the technology.
“We’re going to take AI and put a tire tread on it so that business can use it,” said Barnhouse.
Consumer demand
One local company that has its pulse on consumer demand is
Generac. The manufacturer of generators and energy management products sees varying cycles of demand for its products. Those cycles can be tied to severe weather events, when portions of the globe become hyper-aware of the insecurity of our current power grid, and to broader consumer confidence in the economy. The less confidence consumers have in the economy, the less likely they are to purchase a big-ticket item like a generator for their home.
Aaron Jagdfeld, president and CEO of Generac, said for the first time on months, consumers are in a good place financially. However, that security isn’t necessarily translating into strong consumer demand.
“Consumers are not in a great place of emotion and it all comes down to that single word, which is: uncertainty,” said Jagdfeld. “At the end of the day, if you’re concerned about the future, it’s difficult to get you to make decisions around big purchases.”
He predicts the next year will provide a challenging environment for businesses as there are still questions as to the Federal Reserve’s next moves and the overall health of the economy moving forward.
Regardless of what the next few months bring, Jagdfeld said Generac learned a key lesson during the pandemic that the company will carry on indefinitely: redundancy in your supply chain is critical.
“We’re no longer sole-sourced, those days are absolutely gone,” he said. “It makes the supply chain immeasurably more complex, but it’s necessary to have redundancy.”
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