Brian Dake

New Fed Forecast for 2019: Slower Growth and Zero Rate Hikes

The Federal Reserve sent a stark message Wednesday: The economy is slowing. And it won’t be raising interest rates anytime soon.

The central bank said it was keeping its benchmark rate — which can influence everything from mortgages to credit cards to home equity lines of credit — in a range of 2.25 percent to 2.5 percent. It also announced that by September, it will no longer reduce its bond portfolio, a change intended to help keep long-term loan rates down.

Combined, the moves signal no major increases in borrowing rates for consumers and businesses. And together with the Fed’s dimmer forecast for growth this year — 2.1 percent, down from a previous projection of 2.3 percent — the statement it issued after its latest policy meeting suggests it’s grown more concerned about the economy. What’s more, with inflation remaining mild, the Fed feels no pressure to tighten credit.

The Fed’s new embrace of patience and flexibility reflects its response since the start of the year to slow growth at home and abroad, a nervous stock market and persistently mild inflation. The Fed executed an abrupt pivot when it met in January by signaling that it no longer expected to raise rates anytime soon.

The shift toward a more hands-off Fed and away from a policy of steadily tightening credit suggests that the policymakers recognize that they went too far after they met in December. At that meeting, the Fed approved a fourth rate hike for 2018 and projected two additional rate increases in 2019. Powell also said he thought the balance sheet reduction would be on “automatic pilot.”

Dairy Task Force 2.0 Approves 49 Additional Recommendations

In an effort to alleviate the financial and emotional stress experienced by our state’s dairy
farmers, the 31 members of the Dairy Task Force 2.0 approved 49 recommendations at their Friday,  March 15th meeting in Sheboygan.

“Every member of this task force understands the importance of our state’s dairy community and the challenges our farmers are facing,” said DATCP Secretary-designee Brad Pfaff. “This group rolled up its sleeves, thought long and hard, and provided a number of important recommendations on what can be done to maintain and grow our state’s world-class dairy industry.”

The Dairy Task Force 2.0 considered how farmers could ensure they are as competitive as they can be in the marketplace. Members recommended all milk producers and buyers to have a current contract/member agreement with the organization marketing the farm’s milk. The group also recommended requiring official animal identification to help prevent or respond to animal disease threats.

Members emphasized the importance of the dairy industry connecting with consumers by sharing a consistent, accurate, and relatable message. The Dairy Task Force 2.0 recommended additional agricultural impact studies, support for agritourism, and need for additional educational programming for non-farm audiences. One recommendation also focused on the need for truth in food labeling for consumers in the marketplace.

The Dairy Task Force 2.0 stressed the need for increased connections across the industry.
Recommendations detailed the need for better collaboration and sharing ideas across the UW System and private industry and the need for more public and private partnerships such as the Producer-Led Watershed Protection Grant Program. The group also noted the need for increased investments in rural infrastructure, including transportation and broadband.

A theme across several recommendations was the need to expand our markets, locally, regionally, and around the world. The group identified the Wisconsin Center for Dairy Research as a partner to gain consumer preference and insights, offer technical assistance for product development, and support export growth. The Dairy Task Force 2.0 also noted the need to reduce logistical obstacles, such as load consolidation.

The Dairy Task Force 2.0 will schedule its next meeting in the coming weeks. A final report, including all 51 recommendations, is expected to be completed this summer. For more information, visit www.dairytaskforce.wi.gov.

 

Foxconn says Work on LCD plant will Begin this Summer

Foxconn Technology Group said Monday it will begin construction of its Gen 6 LCD fabrication facility this summer with the goal of beginning production by the fourth quarter of 2020.  The plant will make LCD screens for products in the education, medical, entertainment, security and smart city markets.

The company has told local officials it anticipates hiring 1,500 employees for the initial phase of operations at the facility, Racine County executive Jonathan Delagrave said. The company has also repeatedly said its committed to eventually creating 13,000 jobs in Wisconsin.

The plant will make LCD screens for products in the education, medical, entertainment, security and smart city markets. When Foxconn originally announced plans for a manufacturing campus in Wisconsin it planned to build a Gen 10.5 facility aimed at making the largest screens in the world. The company changed plans to a Gen 6 plant in 2018 because it offered additional flexibility.

The company said it would announce the winners of bid packages for site utilities, roadways and related storm drainage by April 1. Bid packages for the Gen 6 fabrication facility and ancillary buildings will be announced in May, Foxconn said.

The company and its general contractor, M+WǀGilbane, also plan to hold information sessions for potential subcontractors on April 3 and April 10. Additional details for those sessions have not been announced.

 

Madison Weighs Pricey Plan for 100% Renewable Energy

Madison is poised to take a next big step to address climate change with an initiative that would require $95 million in up-front investments but promises to dramatically reduce emissions and deliver substantial savings over time.

After two years of study, the City Council on Tuesday will consider recommendations from a consultant and the city’s Sustainable Madison Committee on how to achieve 100 percent renewable energy and zero net carbon emissions by 2030 through an array of actions including energy-efficient buildings, solar power and electric buses.

To get to 100 percent renewable energy, all city government energy needs must be met through generation of power from solar panels on city facilities or from clean energy elsewhere by investing in large solar or wind farms. Zero net carbon means slashing the city’s 95,000 tons of annual emissions.

The proposed plan would require a $95 million investment over 12 years and deliver $78 million in cost savings and health and societal benefits of $21 million to $162 million by 2030, according to a report by Navigant Consulting of Chicago. It would reduce total carbon emissions by 426,000 tons by 2030, the report says.

The estimated $95 million in additional investments include:

  • $60 million to move from diesel to 232 electric buses, and changes to the vehicle fleet.
  • $16 million for solar installations in the area, plus $5 million for solar installations elsewhere.
  • $6 million for building efficiencies, largely through changing to LED lighting.
  • $5 million for more efficient LED streetlights.
  • $1.5 million to make water pumping more efficient.
  • $1.5 million to implement the program and other costs.

Miller Park Tax Projected to End in March 2020

Miller Park tax district officials are hedging that the 0.1 percent sales tax won’t go into extra innings and expect to end the controversial revenue source in March 2020.

Every year for more than two decades, the board members of the Southeast Wisconsin Professional Baseball Park District have been receiving updates on where the district is in the process of retiring the tax. On Tuesday, the district board met to map out what is hoped to be the final year of the tax, which funded construction of Miller Park, home of the Milwaukee Brewers. The stadium opened in 2001.

David Anderson, director of PFM Financial Advisors, said assuming no dramatic decline in sales tax receipts, the district will have accumulated sufficient funds in late 2019 or early 2020 to begin the sales tax retirement process.

“This is finally the time to be saying ‘Yes, it’s closing down,’” Anderson said. “As we’ve gotten closer and closer (to the end), the number of variables have just been reduced or eliminated. Right now the only variable that could impact anything is the collection of sales tax.”

Don Smiley, chairman of the district board, said that after March 2020 the district will have placed enough funds in escrow accounts to meet its future contractual obligations.

“Baring severe unforeseen circumstances, all indications are that the district will be in a position to certify the end the 0.1 percent Miller Park sales tax at its meeting of March of 2020,” said Smiley, a Racine native who also is president and chief executive officer of Summerfest and a former president of the Florida Marlins, a Brewers rival in the National League.

Senate Committee Grills PSC Chair on Costs of Governor’s Carbon-Free Electricity Goal

Wisconsin’s top utility regulator wouldn’t say what it might cost consumers to meet Gov. Tony Evers’ proposal to make the state’s electricity carbon-free but vowed Tuesday to seek creative ways to manage the transition to a clean energy economy.

During a confirmation hearing before the Senate Committee on Utilities and Housing Tuesday, Public Service Commission chairwoman Rebecca Valcq said the agency should strive “at a minimum” to maintain rates competitive with neighboring states.

Across all consumer sectors, Wisconsin electricity rates are now the second-highest in the Midwest.

In response to questions from committee chairman Sen. Devin LeMahieu, R-Oostburg, Valcq said she would scrutinize every rate case that comes before the commission to find a reasonable balance between the financial health of utilities and the interests of ratepayers. But she would not speculate on what would constitute “reasonable” rates.

LeMahieu asked whether the Democratic governor consulted utilities before including in his budget proposal a statutory goal of generating all electricity from carbon-free sources by 2050.

Valcq said she did not know but noted that four of the state’s largest investor-owned utilities have committed to slashing 80 percent of carbon emissions by 2050 and one — Xcel Energy — has pledged to be carbon-free.

The transition will require a combination of efforts, Valcq said, including improvements to energy efficiency, technological advances in battery storage and financing mechanisms to ensure consumers aren’t stuck paying for obsolete fossil fuel plants if they are retired early.

“There’s no silver bullet,” she said. “If any state can get out in front of it and come up with good solutions, it’s Wisconsin.”

Local Judge: The Upcoming Wisconsin Supreme Court Election Could Impact all in State

Brian Hagedorn and Lisa Neubauer are competing to replace the retiring supreme court justice Shirley Abrahamson in the upcoming Wisconsin Supreme Court election on April 2.

The Wisconsin supreme court rules on cases that don’t already have a clear legal precedent. Those decisions have an impact on all Wisconsinites, according to Judge Scott Horne with the La Crosse County Circuit Court.

Judge Horne said voters have a responsibility to look at candidates through a critical lens and select the one who will be the most fair minded and knowledgeable about the law.

Wisconsin AG Kaul Supports National Law to Combat Robocalls and Phone Scams

Wisconsin Attorney General Josh Kaul is joining the rest of his colleagues across the country to push for a new law that would put a damper on robocalls.

Kaul says the TRACED act would direct telecommunications companies in the US to create a system to detect and stop spoofed calls, and to stop selling spoofed numbers to scammers.

“They would be required to implement this technology within, I believe it’s 18 months. So that’s one of the good things about the legislation is that it puts a mandate in place.”

He says scam calls and robo calls are consistently the biggest threat to consumers right now. “That’s why the required implementation of a call authentication framework is really important because it will reduce the likelihood consumers get these calls with spoofed area codes.”

The bill would also make it easier for law enforcement to prosecute the crooks running these outfits, even if they’re based overseas.

Governor Evers Unveils $2.5 Billion Capital Budget

Gov. Tony Evers unveiled a capital budget Thursday that calls for $2.5 billion in new building projects around the state, an amount larger than any capital budget approved by former Gov. Scott Walker.

The state would borrow roughly $2 billion to pay for the budget, which includes more than $1 billion in new building projects throughout the University of Wisconsin System.

“This will be something that lots of people can find projects that they’ll appreciate,” said state Department of Administration Secretary Joel Brennan at a Wispolitics forum Thursday in Madison. Brennan said a backlog of building projects was part of the reason the capital budget would borrow so much more than it did in recent years.

“There’s so much of the stock of buildings at the university system that were built in the 50s and 60s and there is a lot of it that is getting beyond its usable life all at the same time,” Brennan said. “So I think there’s an opportunity there to make some investments that are not only doing things to make sure that we’re replacing buildings that are old but forward thinking and looking at where are we going in terms of economic development and workforce development in the state.”

Republicans said they were still reviewing Evers’ proposal, but at least a couple said they were concerned by the level of borrowing.

“Really sounds like the People’s Budget … so long as those people live inside the MSN/MKE bubble,” tweeted Assembly Majority Leader Jim Steineke, R-Kaukauna.

“At a first glance, the level of spending and bonding is alarming,” said Sen. Majority Leader Scott Fitzgerald, R-Juneau. “We’ll continue to review the capital budget proposal and discuss it as a caucus moving forward, but Senate Republicans are committed to protecting hard-working Wisconsin taxpayers.”

 

Wisconsin Export Growth in 2018 Well Behind National Average

Wisconsin companies exported $22.7 billion of goods from the state in 2018, a 1.8 percent increase from 2017, according to data from the U.S. Census Bureau. The state’s export growth ranks 38th in the country and was well behind the 7.6 percent increase in exports nationally.

Canada remained the top destination for Wisconsin products in 2018, up 1.7 percent to $7.03 billion in goods. Shipments to Mexico increased 8 percent to $3.5 billion, keeping it as the number two destination for the state.

Imports from China into Wisconsin increased by more than $1 billion last year, a 14.4 percent increase that kept China as the top importer into the state.