As the second half of the year begins, bankers don’t have the rosiest outlook on the state’s economy.
In a recent survey by the Wisconsin Bankers Association, 62.4 percent of respondents said the current health of the Wisconsin economy is fair. Another 36.7 percent rated the economy in good health, while just 1 percent said it was excellent and 0 percent said it was poor.
“The recovery of both the banking industry and the state itself has been a slow, yet steady progression in the right direction for consumers and our economy,” said Rose Oswald Poels, WBA president and chief executive officer. “We are experiencing an upward economic trending in the Badger State, albeit not as quickly as all of us would like.”
More than half (51 percent) expect the state’s economy to stay the same over the next six months, while 47.2 percent expect it to grow. Just 1.9 percent expect the economy to weaken in the second half of the year.
The outlook on loan demand was similarly mediocre.
“A gradual recovery can produce a cautious approach to borrowing by businesses as well as consumers,” Poels said. “Add to the mix many of the unknowns that businesses and consumers are struggling with (health care law changes, tax policies, federal deficit, upcoming elections, etc.) and you have an environment where there is a lack of willingness to expand or take on additional debt despite the fact that Wisconsin’s banks are more than ready to lend in all lending categories.”
When asked to “rate the current demand for business loans in the market(s) you serve,” 68.2 percent of those surveyed said it was fair. Another 17.8 percent rated the demand as good, 13.1 percent said it is poor and just 0.9 percent rated the business loan demand as excellent.
Looking ahead, 59.4 percent of bankers expect business loan demand will stay the same over the next six months, while 38.7 percent expect demand to go up in the second half of the year and just 1.9 percent expect it to decline.
Those surveyed also mostly expected the same for commercial real estate demand over the next six months. About 65 percent say it will stay the same, 31.5 percent expect it will increase and 3.7 percent think it will go down.
When asked to rate the current demand for residential real estate loans in the markets they serve, 51.9 percent of bankers said it is fair. Another 24.1 percent said the residential demand is good, while 23.2 percent rated it poor and only 0.9 percent described it as excellent.
Over the next six months, most respondents expect residential real estate loan demand will stay the same. About 61 percent said it will remain flat, 33.3 percent expect it to go up and 5.6 percent see it going down.
But there is good news in one loan category. When asked to rate the current demand for agricultural loans in the markets they serve, 41.7 percent of those surveyed described it as good. About 39.6 percent said ag demand is fair, 17.7 percent said it’s poor and 1 percent described the demand as excellent.
However, in the second half of the year most bankers expect agricultural loan demand to remain flat, with 81.7 percent saying it will stay the same. Another 14 percent expect it to go up, while 4.3 percent say it will go down.
The WBA Bank CEO Economic Conditions Survey was conducted from mid-May to mid-June and included 94 Wisconsin-based bank presidents and CEOs.
