But analysts figure an economc rebound near year's end
by paul holley
f you work in a manufacturing plant or sell real estate, you'd say there's a recession on.
Then, maybe you wouldn't.
The first quarter economic indicators, tracked by the Journal Times, were generally down from the same period a year ago. But those who watch the economy say things should change for the better later this year.
"I think the bulk of the consumer recession is behind us, but the capital spending recession still has some time left," said James Huebner, vice president and economist with M&I Investment Management Corp. in Milwaukee.
Huebner told a Racine audience last week that he believes the current downturn is half over. He sees growth returning nationally this fall and to Wisconsin by early 1992. Traditionally, Wisconsin enters and leaves recessions one to two quarters later than the rest of the country, he said.
Gene Schubert, a state Department of Revenue economist, is more optimistic. He sides with studies that show the Wisconsin and the U.S. economies moving at about the same pace. He also follows the general consensus of economists who believe that an economic recovery has already started.
"If you believe the current data, we're still moving sideways, like we have for about the past year," he said. "We're not seeing a full-blown cycle yet."
Schubert said that unlike the 1980-82 recession, which devastated Wisconsin and other Great Lakes states, this slowdown has seen manufacturing sector declines offset by growth in the trade and service sectors.
"If the consensus forecast is correct (a recovery starting this summer), Wisconsin won't get hit terribly hard," he said.
But Schubert admits he is bothered by signs that consumers still aren't buying cars and other big-ticket items. That trend could be troublesome to many Wisconsin companies that rely on the automotive industry, he said.
A Racine business operator is feeling better about economic prospects than he did a few months ago.
Peter Freres, president of Sterling Tool Co., 932 S. Memorial Drive, said, in January, the tool and die shop's work week dropped from 45 to 40 hours as its order backlog dipped from the usual 8 to 10 weeks to 5 weeks. But the volume of work has since recovered, he said.
"The general impression I get is all real positive," he said. Materials suppliers report that business has picked up recently, he said.
Sterling's 22-member work force will remain steady, and Freres said the company may possibly add an employee this year.
Labor market After months of little or no change, Racine County's jobless rate shot up in the first quarter, according to Job Service statistics.
The jobless rate averaged almost 7 percent during the quarter compared with 5.5 percent a year ago. Manufacturing was the chief cause, said Jeff Brodzeller, labor market analyst at the Lakeshore District Job Service office.
In March, when the jobless rate topped 7 percent for the first time since 1987, there were an estimated 800 fewer manufacturing jobs than a year ago. The total number of non-farm jobs had actually climbed by 700 positions because of increases in services, retail and wholesale trade.
The quarter was particularly tough for two of Racine's largest manufacturing employers, J.I. Case Co. and Twin Disc Inc.
Case, a producer of agricultural and construction equipment, posted a $147 million first quarter loss and will continue to reduce production by extended plant shutdowns this year. The poor performance and uncertain outlook prompted the company to delay construction on a $20 million phase of its Downtown Racine headquarters complex this year.
Twin Disc, which makes heavy duty transmission equipment, continued to battle weak sales in the first quarter. It announced further layoffs of salaried and production employees and reduced its dividend to trim expenses.
As the unemployment rate climbed, the amount of help-wanted advertising in the Journal Times fell by nearly 25 percent in the first quarter.
Bill Richard, Lakeshore Job Service office director, noted that January and February were typically slow months for job orders at his office. Activity didn't rebound until March.
Real estate /construction Home sales and new construction contracts were off sharply in the first quarter. Blame the Persian Gulf war and recession uncertainties, said industry members.
The Racine Multiple Listing Service reported that first quarter home sales fell by 27 percent from a year ago to 162 sales. However, Diane Maritato, Racine Board of Realtors president, noted that it took an average of just 50 days to sell a home compared with 66 days last year. The average single-family home sales price was up by 7 percent from a year ago to $76,216.
F.W. Dodge Division of the New York-based McGraw-Hill Inc., an information service which tracks new construction contracts, reported a 39.3 percent decline in Racine County projects in the first quarter. Much of the drop apparently came in the city of Racine, where there were no new housing starts this year compared with six single-family and two multiple family projects totaling $6.3 million a year ago.
"It's got to be the economy. Things have slowed as far as new construction," said Bob Jensen, chief building inspector.
But construction activity was reported to be good in the suburban areas.
Kirk Buchaklian, Caledonia building inspector, said the 50 single-family home permits he's issued this year number about the same as in 1990.
John Hessenthaler, Mount Pleasant building inspector, said the number of commercial projects is on track with a year ago, but single-family starts are off by 72 percent.
However, the housing drop isn't just tied to economics, Hessenthaler said.
"It appears that because of a lack of subdivision lots, we're not getting the permits," he said. "That all should change though."
Hessenthaler said two subdivisions containing 54 lots should be ready in a few weeks, and he expects as many as 120 lots to be available later this year.
Bank assets First quarter bank statistics were not available from the state banking commissioner's office in time for publication. A year ago, the county's nine state-chartered commercial banks had assets of $1.08 billion.
Farm commodities Big wheat supplies reported by Canada and Europe sent wheat prices down the tubes in the first quarter. Prices were fairly steady for corn and soybeans in Racine County.
"Wheat prices really went in the dumpster, but I'm not sure it's entirely justified," said Lyle Pratt, state agriculture statistician. He noted that early winter wheat production reports show a smaller than expected crop and good export demand.
Chris Gorman of Racine Grain Co. said much of the county's winter wheat crop was damaged by weather and is being replaced by other crops this spring.
Wisconsin farmers plan to plant 3.8 million acres of corn this year, a 3 percent increase from 1990.
Soybean acreage may increase 11 percent over last year to 490,000 acres, according to the Wisconsin Agricultural Statistics Service in Madison. Pratt said the actual planting results won't be known until about mid-June.
While crop prices are hanging in there, Pratt said the big concern is milk prices, which have fallen about 25 percent over the past year.
"I'm not sure what the answer can be," Pratt said. "I just hope something can be done."