More than 60% of Wisconsin bank CEOs say a recession is likely or very likely in the next six months, according to survey results from the Wisconsin Bankers Association.
The survey was conducted May 24 to June 10 with 56 respondents, including 45% who said a recession is likely and 16% who said a downturn is very likely.
The WBA’s two previous surveys – conducted at the end of 2021 and a year ago – did not ask the same question about an upcoming recession, but CEOs were asked what they expected the Wisconsin economy to do over the next six months.
In the latest survey, 63% of respondents said the Wisconsin economy would weaken over the next six months, up from 15% at the end of 2021 and 39% a year ago. In the latest survey, 36% said the state’s economy would stay the same, down from 64% at the end of 2021.
Just 2% of respondents to the latest survey expect the state's economy to grow, down from 21% at the end of the year.
The WBA also asked bankers for their outlook on inflation over the next six months and 50% said they expect it will rise, compared to 28% who said it would stay the same and 22% predicting a fall.
While Wisconsin bankers may have soured on the outlook for the state's economy, it does not appear they are expecting their clients to make significant job cuts.
In fact, 31% expect businesses in their market to hire employees over the next six months, although that is down from 68% who expected increased hiring at the end of last year.
A majority of respondents, 61%, expect businesses to maintain current staffing levels, up from 33% that expected that approach at the end of the year.
Just 7% of respondents expect businesses in their market to lay people off in the next six months.
Similarly, just 4% of banks said they would lay people off, 63% said they would maintain their current staffing and 34% plan to hire additional employees.
The expectations for a slowdown do show up in the outlook from bank CEOs for their various business lines.
For business loans, 48% rated current demand as good, the same percentage as the end of the year, but over the next six months, 48% of respondents expect business loan demand to weaken, up from 14% at the end of the year.
In commercial real estate, 52% said demand is good, up from 44% at the end of the year, but 48% expect demand to weaken over the next six months, up from 21% at the end of the year.
In residential real estate, 50% describe demand as fair, compared to a plurality, 48%, that described it as good in December. Nearly two-thirds of bank CEOs, 63%, expect residential real estate loan demand to weaken over the next six months, up from 56% in December.
Agricultural loans are the one area showing some potential improvement. In the current survey, 37% described demand as good, up from 22% at the end of 2021. The percentage of Wisconsin bank CEOs describing it as fair fell from 58% to 51% and those describing it as poor dropped from 18% to 10%.
A majority of Wisconsin bank CEOs, 63%, see agricultural loan demand staying the same over the next six months, down from 71% that felt that way in December. Another 31% expect demand to weaken, up from 14% in the last survey.
Overall, 64% of respondents rated Wisconsin’s economic health as good, down from 73% in December. Another 29% described it as fair, up from 20%.