Wisconsin Spotlight | June 24, 2020
MADISON — The Badger State’s economy is showing signs of recovery after being battered by the pandemic and state and local lockdowns, according to a report by the Center for Research on Wisconsin on the Wisconsin Economy (CROWE), at the University of Wisconsin-Madison.
But trouble signs remain, including anxious consumers and the constant threat of heavy-handed government regulations that could deliver the knockout punch for many struggling businesses.
CROWE’s examination of foot traffic at commercial locations found activity declined by 55 percent during the last two weeks in March, in year-over-year-same-location changes. Gov. Tony Evers began shutting down the state’s public schools and universities, restricting public gatherings and curtailing travel in mid-March, before his statewide stay-at-home order went into effect on March 24.
Consumer activity dropped by about 60 percent during the week of April 12-18, the low point of the rapid downturn, according to CROWE’s report. The decline was even sharper in some industries. Hotels and restaurants, for instance, saw traffic drop by 75 percent and 70 percent respectively.
“Since bottoming out, activity has recovered, accelerating following the May 13 invalidation of the Safer at Home order,” states the report, referring to the Wisconsin Supreme Court ruling that struck down the Evers administration lockdown.
Consumer foot traffic on the year is down 17 percent, with the reopening of business across much of the state helping to shrink the historic sales declines by two-thirds.
But the report finds there’s a long way to go. Bars and full service restaurants have seen north of 150 percent growth since April, when the economy bottomed out and the Evers administration declared such businesses “nonessential.” Activity, however, remains down by as much as 30 percent, CROWE’s data show.
“Madison had a sharper activity drop than the rest of the state due to the closing of the University of Wisconsin, and its more gradual reopening hand meant slower recovery,” the report notes. Riots, looting and the destruction of stores on Madison’s iconic State Street and downtown amid radical left demonstrations haven’t helped matters. The report does not cover that period of upheaval, which began in late May and continued into early June.
The CROWE report also finds 40 percent of Wisconsin businesses were closed in the worst of the pandemic and lockdowns, with employment down more than 50 percent. Since then, employment has sharply rebounded.
“The food and drink sector had a larger 70% employment drop through April, as not only did 50% of locations close, but those remaining open had minimal staffing,” the report states. “As food and drink establishments have reopened, they have brought back more workers, with employment now down about 15%.”
Wisconsin’s jobless rate recovered slightly to 12 percent last month, down from a revised 13.6 percent in April, according to the state Department of Workforce Development. The Badger State economy added — or returned — nearly 75,000 non-farm jobs in May, many of those retail, food service, leisure and hospitality.
After plummeting in March and into April, spending in Wisconsin has recovered and is now up 1.7 percent over the same period in 2019, according to CROWE’s analysis.
“Consumption patterns shifted, with more spending on groceries and less at restaurants, and a growing share of spending has moved on-line,” the report states. In-store sales remain down over 10 percent.
U.S. consumer confidence was up in early June as the national reopening continued, according to the most recent consumer-sentiment survey. Fear of another virus outbreak, future lockdowns and high unemployment, however, continue to unnerve the American consumer.
“Despite the expected economic gains, few consumers anticipate the reestablishment of favorable economic conditions anytime soon,” said Richard Curtin, the chief economist of the sentiment survey, conducted at the University of Michigan.