News of the Day

Wisconsin’s 130 state-chartered banks continue to demonstrate solid financial performance as of September 30, 2022, according to data released today by the Wisconsin Department of Financial Institutions (DFI).

Total assets of Wisconsin’s state-chartered banks stand at more than $67.1 billion through September 30, 2022, down from $67.8 billion reported September 30, 2021. Despite rising interest rates, the net interest margin is holding steady, decreasing slightly from 3.35% as of September 30, 2021, to 3.33% as of September 30, 2022. Net loans have increased 5.1% from September 30, 2021, up $2.2 billion.

In the twelve months ending on September 30, 2022:

• The capital ratio remained satisfactory at 9.38% compared to 10.97% in September 2021;
• The past due ratio improved to 0.56% from 0.76% in September 2021;
• Net operating income was over $594.3 million, but down from $679.4 million in September 2021 due, in part, to the end of the Paycheck Protection Program (PPP) fee income and secondary market income;
• The return on average assets ratio showed a decline to 1.19% from 1.39% in September 2021; and
• Bank liquidity remained adequate but was impacted by the increase in the loans to assets ratio at 68.89% compared to 64.82% in September 2021.

“As interest rates continue to rise and economic uncertainty persists, Wisconsin’s state-chartered banks are displaying sound decisions and financial performance through the third-quarter of 2022,” said DFI Secretary-designee Cheryll Olson-Collins. “Overall, Wisconsin’s state-chartered banks are financially stable and a source of strength for the economy.”

Tens of millions of additional federal dollars are headed to Wisconsin to provide thousands of additional homes and businesses access to reliable, high-speed internet, the White House announced Thursday.

Speaking to reporters during a press call, Jacob Leibenluft, who leads a branch of the U.S. Treasury Department tasked with overseeing projects created by the American Rescue Plan, told reporters that $40 million for broadband infrastructure will be sent to Wisconsin — enough funds to connect an estimated 8,000 homes and businesses to high-speed internet.

That $40 million is just a portion of $189 million earmarked for Wisconsin through the Capital Projects Fund. The Capital Projects Fund is a $10 billion project created by the American Rescue Plan aimed at ensuring “that all communities have access to … high-quality modern infrastructure, including broadband,” according to the Treasury Department.

Joseph Wender, another Treasury Department official and director of the fund, said the remaining $149 million will be awarded at a later date after the department approves plans for how the money is going to be spent.

Public Service Commission of Wisconsin Chair Rebecca Cameron Valcq said the state plans to use at least portions of the remaining funds on “digital connectivity” and “multipurpose community facility” projects. She said those projects — which she did not offer more details about Thursday — are under review by the Treasury Department.

The Supreme Court is beginning its new term,  and the public is back for the first time since the court closed in March 2020 because of the coronavirus pandemic.

On Monday, the court is considering an important water rights case that could limit federal regulation under the nation’s main water pollution law, the Clean Water Act.

Other significant cases include a controversial Republican-led appeal that could dramatically change the way elections for Congress and the presidency are conducted by handing more power to state legislatures. There’s also the case of a Colorado website designer who says her religious beliefs prevent her working with same-sex couples on their weddings. Next month, the justices will hear a challenge to the consideration of race in college admissions.

The Conference Board Consumer Confidence Index increased in September for the second consecutive month. The Index now stands at 108.0 (1985=100), up from 103.6 in August. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—rose to 149.6 from 145.3 last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—increased to 80.3 from 75.8.

“Consumer confidence improved in September for the second consecutive month supported in particular by jobs, wages, and declining gas prices,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index rose again, after declining from April through July. The Expectations Index also improved from summer lows, but recession risks nonetheless persist. Concerns about inflation dissipated further in September—prompted largely by declining prices at the gas pump—and are now at their lowest level since the start of the year.”

“Meanwhile, purchasing intentions were mixed, with intentions to buy automobiles and big-ticket appliances up, while home purchasing intentions fell. The latter no doubt reflects rising mortgage rates and a cooling housing market. Looking ahead, the improvement in confidence may bode well for consumer spending in the final months of 2022, but inflation and interest-rate hikes remain strong headwinds to growth in the short term.”

Some $45.6 billion in pandemic unemployment benefits may have been fraudulently paid to criminals between March 2020 and April 2022, the US Department of Labor’s Office of the Inspector General said in a memorandum on Thursday.

Fraud within the nation’s unemployment system skyrocketed after Congress enacted a historic expansion of the program to help Americans deal with the economic upheaval sparked by the Covid-19 pandemic in March 2020. State unemployment agencies were overwhelmed with record numbers of claims and relaxed some requirements in an effort to get the money out the door quickly to those who had lost their jobs. Within five months, more than 57 million people filed claims for unemployment benefits, the inspector general’s office said.

“Hundreds of billions in pandemic funds attracted fraudsters seeking to exploit the UI program — resulting in historic levels of fraud and other improper payments,” Inspector General Larry Turner said in a statement.

Nearly a million Social Security numbers were used by people who filed for benefits in two or more states, resulting in benefits paid from more than one state, the inspector general’s office said. They received nearly $29 billion in potentially fraudulent payments. And 1.7 million Social Security numbers associated with suspicious email addresses were used to file for $16.2 billion in benefits.

The inspector general’s office said that it has had difficulty getting unemployment insurance data from state workforce agencies until subpoenas were issued. In some cases, the data sent was incomplete or unusable.

The inspector general’s office also took issue with the Department of Labor’s Employment and Training Administration, which oversees the unemployment insurance program, saying the agency has not implemented the office’s previous recommendations including to collaborate with state agencies to establish effective controls to mitigate fraud and to work with Congress to require state agencies to cross-match high-risk areas.

“ETA’s lack of sufficient action significantly increases the risk of even more UI payments to ineligible claimants,” the inspector general’s office wrote in the memorandum.

The inspector general’s office also announced Thursday that more than 1,000 people have been charged with crimes involving unemployment benefits fraud since March 2020, and there have been more than 400 convictions to date. It has opened more than 190,000 investigations into unemployment benefits fraud, an increase of more than 1,000 times in the volume of the office’s unemployment insurance work.

Yesterday, the Public Service Commission of Wisconsin (PSC) announced the creation of a new, additional area code to overlay the area in which the 608 area code is now in service.

The 608 area code is expected to run out of assignable prefixes (the three numbers in a phone number following the area code) in the first quarter of 2024. The new 353 area code will be used to provide telephone numbers to new customers. All current customers will retain their existing telephone numbers and will continue to dial and receive calls without change.

The Commission approved the petition by the North American Numbering Plan Administrator (NANPA), the neutral third-party area code relief planner, to overlay a new area code. This decision will provide additional numbering resources to meet the demand for telephone numbers. The new 353 area code will be in service by late 2023.

An area code overlay adds a second area code to the geographic region served by the existing area code. Therefore, multiple area codes co-exist within the same geographic region. Once the 608 area code runs out of assignable prefixes, new customers in southcentral and southwestern Wisconsin may be assigned telephone numbers in the new 353 area code. Customers will continue to dial the three-digit area code for all calls to and from telephone numbers with the 608 and 353 area codes. The price of a call will not change due to the overlay. Customers can still dial just three digits to reach 911, as well as 211, 311, 411, 511, 611, 711, 811, and 988, the new Suicide & Crisis Lifeline.

The plan filed by the North American Numbering Plan Administrator can be found here: PSC REF#: 440694

Retail sales, a measure of how much consumers spent on a number of everyday goods, including cars, food and gasoline, rose 0.3% in August, the Commerce Department said Thursday.

That is an improvement from the downwardly revised data in July, which showed that retail sales actually tumbled 0.4%.

The August advance is not adjusted for inflation – which rose 0.1% last month – meaning that consumers may be spending the same but getting less bang for their buck.

“Consumer spending has flatlined in real terms in the face of steep inflation and interest rate increases from the Fed,” said Ben Ayers, a senior economist at Nationwide. “While retail sales continue to move higher, much of this is due to higher prices which push up the dollar volume of sales. This is another indication of the general slowdown in activity across the economy this year.”

A potential nationwide freight rail strike is looming, threatening to cripple the U.S. economy ahead of the holiday shopping season. Roughly 115,000 rail workers could walk off the job as soon as September 16 if they cannot agree to a new contract with railroads.

Five of the 13 unions representing rail workers have reached tentative agreements with railroads to enact the Presidential Emergency Board (PEB) recommendations, which call for 24 percent pay raises, back pay and cash bonuses.

But the bulk of railroad workers belong to unions that haven’t yet agreed to a deal. It’s also unclear whether workers would vote to ratify PEB recommendations that don’t address their concerns about punishing hours and rigid schedules that make it difficult to take time off for any reason.

“I would suspect that most railroad workers would love to strike, would love to get back at their employers after years of abuse while they watched the industry make record profits,” said Ron Kaminkow, an organizer at Railroad Workers United, which represents rank-and-file railroaders.

Federal law gives Congress the power to block or delay a railroad strike. If workers were to walk out, lawmakers could vote to enact the PEB deal or appoint arbitrators to fast-track a new contract, among a range of other options.

The Association of American Railroads, which estimates that a national rail shutdown would cost the U.S. at least $2 billion a day, said that lawmakers should vote to implement the PEB recommendations in the event of a strike to “instantly reward employees and reduce economic uncertainty.”

Experts say that an extended walkout would devastate industries that rely on freight to transport grain, coal, diesel, steel and motor vehicle parts. Shipping containers would pile up at ports, severely congesting supply chains and sending prices soaring ahead of the holidays.

Yesterday, Governor Tony Evers announced that Wisconsin high school juniors and seniors heading back to school this fall will have 14 new occupational pathways that local employers can support, thanks to ongoing modernization efforts by the Wisconsin Department of Workforce Development (DWD).

Working in collaboration with school consortiums, employers, the Wisconsin Technical College System, and other partners, DWD has modernized the framework for a total of 75 Youth Apprenticeship (YA) program pathways to help industries like construction, health sciences, marketing, science and engineering, and transportation find and develop home-grown talent.

DWD’s YA Program Modernization Initiative resulted in 14 new occupational pathways in which local employers can offer apprenticeship opportunities to students. These include:

• Agriculture, Food, and Natural Resources, new pathways: Arborist and Dairy Grazier.
• Architecture and Construction, new pathways: Gas Distribution Technician, Heavy Equipment Operator/Operating Engineer, and Utilities Electrical Technician.
• Arts, Audio Visual Technology and Communications, new pathway: Media Broadcast Technician.
• Health Science, new pathways: Phlebotomist and Resident Aide.
• Information Technology, new pathway: IT Broadband Technician.
• Manufacturing, new pathway: Electro-mechanical/Mechatronics.
• Transportation, Distribution, and Logistics, new pathways: Airport Operations and Management, Aviation Maintenance Fundamentals, Aviation Airframe and Powerplant Technician, Aviation Avionics Technician.

The YA program is coordinated and provided around the state by consortia that often consist of school districts, technical colleges, and chambers of commerce. Of the 421 public school districts, 321 districts, or 76.2 percent, had students enrolled in YA for the 2021-2022 school year.

Employers interested in becoming a youth apprenticeship sponsor can find more information here.

President Biden signed the Inflation Reduction Act into law on Tuesday, saying “the American people won, and the special interests lost.”

The bill, which was passed by the Senate earlier this month and the House of Representatives last week, costs an estimated $437 billion, with $369 billion going toward investments in “Energy Security and Climate Change,” according to a summary by Senate Democrats.

Democrats project that the legislation will reduce the deficit by bringing in $737 billion. This includes an estimated $124 billion from IRS tax enforcement, the projected result of hiring 87,000 new IRS agents who will ramp up audits.

The bill also imposes a 15% corporate minimum tax that the Joint Committee on Taxation predicts will raise $222 billion, and prescription drug pricing reform that the Senate estimates will bring in $265 billion.

One thing the Inflation Reduction Act is not expected to do, according to multiple analyses, is reduce inflation. The Congressional Budget Office said the bill will have “a negligible effect” on inflation in 2022, and in 2023 its impact would range between reducing inflation by 0.1% and increasing it by 0.1%.