The vast majority of Wisconsin bank CEOs say a recession is likely or very likely in the next six months, according to the latest Wisconsin Bankers Association survey of bank leaders.
Conducted Nov. 15 to Nov. 30, the survey included responses from 71 bank executives in the state. It found 62% say a recession is “likely” in the next six months and another 25% says one is “very likely.”
When the WBA asked about the likelihood of a recession in June, 45% said one was likely within six months and 16% said very likely.
For Wisconsin specifically, 72% expect the state’s economy to weaken in the next six months, up from 63% in June.
Despite the pessimistic outlook for the future, the state’s bank CEOs are generally enthusiastic about the current state of Wisconsin’s economy. The survey found 69% described it as "good" and another 6% called it "excellent."
Views on inflation have shifted dramatically since the June survey, when 50% expected it to rise over the next six months. The latest survey found just 24% expecting a continued rise in inflation while 51% expect it to fall, a figure that was just 22% in June.
Bank CEOs reported weaker loan demand across business lines. Commercial real estate was the hardest hit. In June, 59% said CRE loan demand was good or excellent, a figure that fell to 40% in the latest survey.
Residential real estate also took a hit. In June, 22% said loan demand was good or excellent and just 11% hold that view now.
Business loan demand saw the smallest dip, going from 50% to 47% in terms of Wisconsin bank CEOs describing demand as good or excellent.
Looking ahead, the state's bank CEOs were also most pessimistic about demand for commercial real estate loans with 63% expecting demand to weaken, up from 48% in June. Similarly, 56% expect business loan demand to weaken, up from 48% in June.
The executives had a slightly different view on residential real estate loans with 54% expecting demand to weaken, down from 63% in June.
Even with uncertainty and pessimism about the direction of the economy, the bank CEOs were generally optimistic about labor markets maintaining their status quo. The majority, 71%, expected business in their area to maintain current staffing levels. Just 11% said they expect businesses to lay off employees, up slightly from 7% in June.