Job Growth Shows Some Promise

Milwaukee’s economic recovery will continue to gain ground, supported by a moderate and sustainable pace of hiring. Based on recent trends, job creation will reach 3,800 new positions in 2010, an increase of 0.5% from 2009, matching the forecasted national growth rate. Though gains have been relatively modest, the resumption of employment growth this year remains a welcome change after losing a combined 65,000 jobs between 2008 and 2009. The majority of employment sectors in the metro area have either stabilized or resumed growth as of the third quarter. Year-to-date in 2010, expansion has been most robust in the leisure and hospitality segments, and a recent decision by Harley-Davidson to remain in Milwaukee should preserve jobs over the extended outlook. Additionally, the impact of the housing market downturn on the local economy has been moderate when compared to other markets around the country. As of Q3, the median existing home price in the metro area was within 10% of peak levels, compared to a drop-off of roughly 25% nationwide.

Commercial real estate fundamentals softened across property sectors in recent years but appear close to stabilization. So far in this cycle, the volume of properties falling into distress has been limited in the Milwaukee marketplace, a trend that should continue as capital markets ease further in 2011 and strengthening job growth ultimately gives way to recovery in operations. As of late September, known distress in the local commercial real estate market totaled $354 million, ranking at the bottom when compared to other Midwest markets. For perspective, known distressed dollar volume in the city falls behind Kansas City by more than 25%, St. Louis and Minneapolis by approximately 50% and 70%, respectively, and is 95% short of levels reported in Chicago.