News of the Day

President Biden Details Winter Plan to Combat COVID-19

President Biden further detailed his winter plan to combat COVID-19 within the United States in an op-ed Thursday, reiterating his vow that there would not be “shutdowns or lockdowns.”

His plan largely calls for a doubling down on getting the COVID-19 vaccine and booster shots for Americans who are eligible. He said the nationwide booster campaign would be expanded to incorporate more walk-in appointments, longer hours and weekends.

The President also pledged that at-home COVID-19 test kits would be covered by insurance companies or provided free for people to pick up if they did not have private insurance coverage.

The President also suggested that the Centers of Disease Control and Prevention may weigh in on ways for schools to remain open amid the COVID-19 pandemic as the country sees more cases from the newly detected omicron variant.

Wisconsin’s Banks Report Strong Third-Quarter Financial Performance

Wisconsin’s 134 state-chartered banks continue to exhibit strong financial performance as of September 30, 2021, according to data released on Thursday by the Wisconsin Department of Financial Institutions (DFI).

Total assets of Wisconsin’s state-chartered banks stand at more than $67.8 billion through September 30, 2021, an increase of nearly $5.1 billion from September 30, 2020. Excess liquidity from the extension of the COVID-19 pandemic’s Paycheck Protection Program (PPP) loans combined with the low interest rate environment has put pressure on the net interest margin, decreasing it from 3.49% in September 2020 to 3.35% as of September 30, 2021. Net loans have decreased 2.16% from September 2020, down $949.6 million, due, in part, to PPP loans being forgiven or paid down.

In the twelve months ending on September 30, 2021:

• The capital ratio remained strong at 10.97% compared to 11.12% in September 2020;

• The past due ratio declined to 0.76% from mid-pandemic levels when the ratio was 1.17% in September 2020;

• Net operating income was over $679.3 million compared to $557.1 million in September 2020.

• Bank liquidity has been strong, putting pressure on the loans to assets ratio at 64.82% compared to mid-pandemic liquidity levels of 71.57% in September 2020.

Credit Card Applications in the United States are on the Rise

Americans are applying for credit cards at a rate not seen since before the pandemic. Close to 27% of U.S. consumers said in October that they had applied for a credit card in the past 12 months, according to the Federal Reserve Bank of New York. That is the highest level since 2019 and well above the record low of 16% recorded a year ago.

Americans also want to borrow more on their existing cards. More than 11% of U.S. consumers said in October that they had applied for credit-limit increases in the past 12 months, up from about 7% a year ago.

“Many things are slowly returning to more normal times,” said Wilbert van der Klaauw, senior vice president at the New York Fed. “With that, you expect the demand for credit to come back to pre-pandemic levels and continue on the same growth path.”

Banks charge interest on balances that are carried month to month. Credit-card balances remain $123 billion lower than they were at the end of 2019, according to the New York Fed.

Governor Announces More Than $200 Million in Federal ARPA Funds for Wisconsin Communities

Yesterday, Governor Tony Evers announced that $205.7 million has been directed to the 1,825 participating Wisconsin local governments under the American Rescue Plan Act’s (ARPA) State and Local Fiscal Recovery Funds (SLFRF) program.

Under the SLFRF program, counties, large municipalities, and tribal governments received their own allocation from the federal government. Non-entitlement units, those under 50,000 in population, received their distribution from the state. The amount allocated to each local government is based on a specific formula largely based on population.

According to United States Treasury guidance, examples of uses for these funds include, but are not limited to, supporting the public health response to COVID-19, addressing negative economic impacts of COVID-19, improving water, sewer, and broadband infrastructure, paying premiums for essential workers, and replacing public sector revenue losses.

Each non-entitlement community will make their own decisions in line with the Treasury guidance about how to spend these ARPA dollars. They have until 2024 to obligate the funds and until 2026 to spend the funds.

These same local governments will receive a second payment, equal to the payment being announced today in 2022, bringing the total funding made available to over $411 million.

Wisconsin Farmland Worth 10% More Than in 2020

survey of Midwest farm bankers found Wisconsin farmland values are up 10 percent from the same period in 2020.

The Federal Reserve Bank of Chicago surveyed 151 bankers in their district, which includes Iowa and parts of Wisconsin, Illinois, Indiana and Michigan.

The bankers reported the value of good quality farmland across the region had increased by 6 percent from the second quarter to the third quarter of this year. Compared to the third quarter of 2020, bankers reported that land values were up 18 percent.

In Wisconsin, surveyed bankers reported land values were up 1 percent from the previous quarter and 10 percent from the same time last year.

David Oppedahl, senior business economist for the Federal Reserve Bank of Chicago, said the value of land started increasing last fall as the agriculture industry recovered from the initial shocks of the COVID-19 pandemic.

“Over the past year, there have been additional increases in income from both government support programs as well as higher prices for a lot of commodities. So it’s really helped to shore up the finances and provide extra income that’s being used, as well as low interest rates to help support farmland values,” Oppedahl said.

Wisconsin bankers reported a smaller increase in land values than neighboring states like Iowa, where survey respondents reported land values 28 percent higher than in 2020.

Oppedahl said the state’s farm industry includes a wider variety of commodities, meaning land values aren’t as closely tied to corn and soybean prices. He said that also means Wisconsin didn’t see as large of a decline in land values in recent years when those prices fell.

“The more diverse nature of agriculture in Wisconsin and the desirability of areas for rural living have made Wisconsin’s farmland retain its value a little more,” Oppedahl said. “Wisconsin hasn’t increased as rapidly because it’s already at a relatively high level compared to its historical averages.”

Federal Reserve Members Ready to Raise Interest rates if Inflation Continues to Run High

Federal Reserve officials at their meeting earlier this month expressed concern about inflation and said they would be willing to raise interest rates if prices keep rising.

The committee that sets interest rates for the Fed on Wednesday released the minutes from the November session where it first signaled that it could be dialing back all the economic help it’s been providing during the pandemic.

The meeting summary indicates a lively discussion about inflation, with members stressing the willingness to act if conditions continue to heat up.

“Various participants noted that the Committee should be prepared to adjust the pace of asset purchases and raise the target range for the federal funds rate sooner than participants currently anticipated if inflation continued to run higher than levels consistent with the Committee’s objectives,” the minutes stated.

Officials stressed a “patient” approach regarding incoming data, which has shown inflation running at its highest pace in more than 30, the years.

But they also said they would “not hesitate to take appropriate actions to address inflation pressures that posed risks to its longer-run price stability and employment objectives.”

New Weekly Jobless Claims Plunge to 199K, Lowest Level Since 1969

New weekly claims for jobless aid plunged to the lowest level in more than 50 years last week, according to data released Wednesday by the Labor Department.

In the week ending Nov. 20, there were 199,000 initial applications for unemployment insurance, according to the seasonally adjusted figures, a decline of 71,000 from the previous week. Claims fell to the lowest level since November 1969 and are now well below the pre-pandemic trough of 225,000 applications received the week of March 14, 2020.

“Getting new claims below the 200,000 level for the first time since the pandemic began is truly significant, portraying further improvement,” said Mark Hamrick, chief economic analyst at Bankrate.com.

“The strains associated with higher prices, shortages of supplies and available job candidates are weighed against low levels of layoffs, wage gains and a falling unemployment rate,” he continued. “Growth will likely be above par for the foreseeable future, but within the context of historically high inflation which should relax its grip on the economy to some degree in the year ahead.”

Biden Administration to Release 50 Million Barrels of Oil from Strategic Reserve

The Department of Energy will release 50 million barrels of oil from the nation’s Strategic Petroleum Reserve, the White House announced Tuesday, as the Biden administration seeks ways to control rising costs at the pump.

Tuesday’s announcement was made in concert with China, India, Japan, South Korea and the United Kingdom, which will also tap into their own strategic reserves.

The consumer price index, which tracks inflation for a range of staple goods and services, rose 0.9 percent last month and 6.2 percent in the 12-month period ending in October. The rise in prices was driven largely by a 4.8 percent increase in energy costs for the month, including a 1.6 percent increase in gasoline prices.

Sen. John Barrasso (R-Wyo.), the ranking member of the Senate Energy Committee, said on Tuesday that Biden’s own policies were to blame for needing to tap into the strategic reserve.

“We are experiencing higher prices because the administration and Democrats in Congress are waging a war on American energy,” Barrasso said in a statement, arguing Tuesday’s announcement would not fix the problem alone.

“Begging OPEC and Russia to increase production and now using the Strategic Petroleum Reserve are desperate attempts to address a Biden-caused disaster,” Barrasso added. “They’re not substitutes for American energy production.”

Housing Permits Rise in Wisconsin

The number of new housing units permitted in Wisconsin from January through September 2021 increased 26% over the same months in the prior year, new data from the U.S. Census Bureau show. That compares to a 22.9% increase seen nationally during this period. This trend does not simply reflect a rebound from the pandemic: new housing unit permits also are up through September 2021 compared to the same months in the previous four-year average, by 31.9% in Wisconsin and 29.1% nationally.

The trend differs, however, according to housing type. In Wisconsin, single-family housing permits were up 12.2% through September compared to the average of the same period in the prior four years, while multi-family permits were up 67.8% (see Figure 1). This difference separates Wisconsin from neighboring states and from a national trend in which recent permits for single-family and multi-family housing units have increased at relatively comparable rates.

Also worth noting is that the vast majority (67.1%) of the total increase in Wisconsin was for multi-family housing units in complexes of five or more. Notably, this comes in spite of some speculation early in the COVID-19 pandemic that it might dampen demand for higher-density housing.

Data referenced in this report are for residential construction permits issued by about 21,000 local governments collected as part of the Census Building Permits Survey. About 9,000 jurisdictions respond to the monthly survey, with the remainder reporting only on an annual basis. The year-to-date data we examine here is adjusted by the Census Bureau to try to account for missing annual reporters.

 

U.S. House Passes $2 Trillion Spending Bill, but Braces for Changes in the Senate

The House voted on near-party lines Friday morning to approve a roughly $2 trillion social and climate spending package, ending months of squabbles among Democrats over the details of the far-reaching measure. The vote was 220-213, with one Democrat, Rep. Jared Golden of Maine, joining all Republicans in opposition.

The House vote is just the latest step in a lengthy process that will almost certainly involve further changes to the bill.

Centrist Sens. Kyrsten Sinema, D-Ariz., and Joe Manchin, D-W.Va., have each expressed concerns about the House version of the legislation. Manchin is particularly opposed to a provision that would provide four weeks of paid family and medical leave for most workers. Sinema’s objections are less clear but Democrats need both lawmakers on board in order for the legislation to pass.

It is unclear how long it would take for senators to work out their disagreements and finalize the legislation. Once that work is done, the Senate would have to start a lengthy process to vote on the bill using the budget reconciliation process that would allow the bill to be passed in the Senate with 50 votes, rather than the 60 votes needed for most legislation.