A crowd of about 500 Milwaukee area business professionals got a comprehensive overview on the economy and its outlook for 2016 at the 15th annual Northern Trust Economic Trends Conference this morning at the Italian Community Center in Milwaukee.
Dr. Michael Knetter, an economist and president and CEO of the University of Wisconsin Foundation, gave his annual macroeconomic overview at the conference. For 2016, Knetter is predicting: the stock market to recover from its bad start to the year to finish flat for the year, 1.5 percent GDP growth, U.S. unemployment at 4.8 percent by the end of the year (compared to 5 percent now) and core inflation at 2.0 percent.
The U.S. dollar will remain stable compared to currencies in other developed countries, but will strengthen compared to currencies in emerging markets, Knetter predicts.
The U.S. expansion is “losing momentum” and the odds of a recession are rising, but Knetter said a recession is still unlikely in 2016.
The strong U.S. dollar demonstrates the strength of the U.S. economy and is good for U.S. consumers, but is a headwind in manufacturing-heavy Wisconsin, Knetter said.
One of the other presenters at the event agreed.
“As the manufacturing guy here, (the strong dollar is) painful,” said. Todd Zakreski, president of HUSCO Automotive, a division of Waukesha-based HUSCO International. “It is a headache.”
Zakreski recently returned from a trip to China, which has seen its economy slow. That has spooked many investors.
“A lot of manufacturers have a lot of bets in China,” Zakreski said. “It’s a risky time.”
“Volatility is the name of the game and it’s here to stay,” Zakreski said. “I forsee an overall slowdown ahead. You’re going to have to be innovative.”
Peter Gunder, chief business development officer for Madison-based American Family Insurance, also spoke at the conference and talked about how the company was making new investments into other companies and technologies that can help prevent damage incidents. He encouraged others to support innovative business startups through groups such as Gener8tor, located in Milwaukee and Madison.
“Whatever industry you are in, no matter your business size, digitalization is disrupting business right now,” Gunder said. “There’s tremendous opportunity with disruption.”
Zakreski also emphasized how crucial it is for manufacturers to be innovative in the increasingly high tech economy.
“Technology is moving very quickly. If you are not innovating you could wake up one day and realize your product is no longer relevant,”he said. “Manufacturers really need to think about how they innovate around product and process.”
ManpowerGroup chief executive officer Jonas Prising closed the event, discussing the labor market. In the U.S. and overseas workforces are bifurcating into the haves and have nots in terms of skills, he said. The skills gap is not just a problem in the U.S., he said.
It is an employees’ market. They plan to work in many different place during their career and if they do not feel their skills are improving, they will change jobs. Helping employees grow and improve is key for employers to retain their workforce, Prising said.
Prising expressed great optimism for Milwaukee, “as a city we’ve made tremendous progress. We’ve really seen our city start to thrive. We are in a fantastic situation as a city.”
However, Prising said he sees one huge problem in Milwaukee: the education system that is leaving a huge percentage of children in the city without an adequate education and therefore leaving them unable to participate fully in the economy.
“It’s not going to be sustainable (for the community) to have so many young people not participating (in the economy) and with no skills,” he said. “The job market of the future has no space or place for people with no skills.”
