Wisconsin Bankers Association

Transcription

1 Wisconsin Bankers Association Wisconsin economic data and forecasts compiled from WBA s Bank CEO Economic Conditions Survey Summer

2 The Bankers Economic Index is a report compiled by the Wisconsin Bankers Association (WBA) intended to utilize the experience and unique perspectives of Wisconsin bank chief executive officers (CEOs) to convey the current state of Wisconsin s economy as well as forecast the next six months of the state s economic trends. These observations are based on the normal monitoring of bank consumer and business customers financial condition and demands. The information was gathered in late July 2007 for this report. WBA is also a co-sponsor of Wisbusiness.com, Wisconsin s news source.

3 Summary The subprime housing market has negatively affected many aspects of Wisconsin s economy, such as housing, construction, the sale of building materials and durable goods. Despite this downturn, Wisconsin bank chief executive officers (CEOs) predict a status quo economy through the end of Generally speaking, the state will not experience the economic swings other parts of the country have recently experienced. In spite of the soft housing market, bankers rate the current health of the Wisconsin Economy as good, 31 percent rate it as fair, and just 1 percent said the economy is poor. Those numbers are slightly more pessimistic than how bank CEOs rated the state s economy at the beginning of the year (See Chart 1). Current State of Wisconsin's Economy Excellent Good Fair Poor Jan. 05 Aug. 05 Jan. 06 Jun. 06 Jan. 07 Aug. 07 Chart 1 Looking forward to the next six months, 75 percent of bank CEOs predict the economy will stay the same, 14 percent expect it will grow, and 11 percent anticipate it will weaken. Those numbers are slightly more optimistic than in January when 21 percent of bankers predicted a more weakened economy (See Chart 2).

4 Wisconsin Economic Forecast Grow Weaken Stay the same Jan. 05 Aug. 05 Jan. 06 Jun. 06 Jan. 07 Aug. 07 Chart 2 Ninety-one percent of the 136 respondents said they did not make any or very few subprime loans. At the same time, 44 percent of bankers saw more consumer and business bankruptcies over the last six months, 36 percent reported higher home foreclosures and 44 percent said past dues for residential mortgages increased over the same period (See Charts 3, 4 & 5). Customer Home Foreclosures % of Bankers Reporting an Increase 4 35% 3 25% 2 15% 1 5% Jan. 06 Jun. 06 Jan. 07 Aug. 07 Chart 3

5 Customer Bankruptcy Filings % of Bankers Reporting an Increase 35% 3 25% 2 15% 1 5% Aug. 05 Jan. 06 Jun. 06 Jan. 07 Aug. 07 Chart 4 Past Dues for Residential Mortgage Payments % of Bankers Reporting an Increase 5 45% 4 35% 3 25% 2 15% 1 5% Jun. 06 Jan. 07 Aug. 07 Chart 5 Those numbers, along with the large inventory of new and existing homes for sale statewide, indicate that a downturn may be creeping into other sectors of the economy and slowing consumer and commercial loan demand. Twenty-eight percent of bank CEOs predict that commercial loan demand, the bread and butter for commercial banks and an important indicator of economic vitality, will go down in the next six months, while 69 percent expect it will stay the same. Just 10 percent predict that commercial loan demand will increase during the same period (See Chart 6).

6 Commercial Loan Prediction Go up Go dow n Stay the same Aug. 05 Jan. 06 Jun. 06 Jan. 07 Aug. 07 Chart 6 Similarly, 28 percent of survey respondents predict residential mortgage loan demand will drop, 60 percent expect it will stay the same, while just 10 percent predict loan demand will increase through the end of 2008 (See Chart 7). Residential Loan Prediction Go up Go dow n Stay the same Aug. 05 Jan. 06 Jun. 06 Jan. 07 Aug. 07 Chart 7

7 In the next six months, bankers predict long term interest rates will stay the same. However, 32 percent expect that long-term rates are likely to rise (See Chart 8). Long-Term Interest Rates Predictions Go up Go dow n Stay the same Jan. 05 Aug. 05 Jan. 06 Jun. 06 Aug. 07 Chart 8 Bankers are predicting a relatively stable employment picture for the state s economy through the end of the year. Eight-one percent expect businesses in their market area will maintain current staffing levels, 12 percent predict businesses will hire workers, while 7 percent predict businesses will layoff employees (See Chart 9). Employment Prediction Hire employess Maintain current staffing levels Layoff employees Aug. 07 Jan. 07 Chart 9

8 For a more detailed report on Wisconsin s current economic conditions and future trends, plan to attend the Wisconsin Economic Forecast Luncheon on January 22, 2008 at the Monona Terrace Convention Center, Madison. Previous events have featured economists from across the United States including Federal Reserve Senior Economist Samuel Kahan. Contact Eric Skrum at eskrum@wisbank.com or 608/ for more information on this event.

9 July 2007 Economic Survey and its results 1) How would you rate the current health of your local economy? Excellent 3% Good 64% Fair 31% Poor 2% 2) How would you rate the current health of the Wisconsin economy? Excellent Good 6 Fair 39% Poor 1% 3) In the next six months, do you expect your local economy to Grow 14% Weaken 11% Stay the same 75% 4) In the next six months, will long-term interest rates Go up 32% Go down 1 Stay the same 58% 5) In the next six months, will short-term interest rates Go up 18% Go down 17% Stay the same 65% 6) In the next six months, do you anticipate that commercial loan demand will Go up 1 Go down 21% Stay the same 69% 7) In the next six months, do you anticipate that commercial real estate demand will Go up 9% Go down 32% Stay the same 59% 8) In the next six months, do you anticipate that residential loan demand will Go up 1 Go down 28% Stay the same 6 9) In the next six months, are the businesses in your bank s market area likely to Hire employees 12% Maintain current staffing levels 81% Layoff employees 7% 10) In the last six months, have the number of financial crimes, including identity theft, perpetrated against either your bank or your customers Increased 41% Decreased 2% Stayed the same 56% 11) In the past six months, has the number of customer bankruptcy filings (residential and business) Increased 33% Decreased 7% Stayed the same 6 12) In the past six months, have the number of customer home foreclosures Increased 36% Decreased 3% Stayed the same 6 13) In the past six months, have the number of past dues for residential mortgage payments Increased 44% Decreased 1% Stayed the same 54%