How will the Trump administration impact Wisconsin's economy? Experts weigh in.

President Donald Trump starts his second term after spending four years touting his ideas on tariffs, inflation, the stock market and the economy.

With his new administration underway, local economists and financial experts are closely watching how the state economy will fare in 2025. Right now it seems like there is a lot of uncertainty, including the possible impact on inflation.

In his first few days, Trump signed a number of executive orders including measures aimed at closing the southern border and curbing immigration. The president has also continued to talk about imposing tariffs on China, Mexico and Canada, which could impact the price of goods in the United States.

The administration's trade policy is a “wild card," said Dominic Ceci, chief investment officer for Racine-based Johnson Financial Group.

“Tariffs will increase prices on certain things, and those prices will really impact lower-end consumers rather than wealthy individuals,” Ceci said, adding he’s seen some companies step up buying before Trump took office. “That whole pact is sort of a vicious circle because it creates inflation. If more people are spending more money right now, the demands for the goods are going up, so they’re driving up the price which is inflationary.” 

But what’s said on the campaign trail and what’s done in the Oval Office can differ.

“We need to see what actually can get done in this first year. Because the first year is sort of that magic window,” Ceci said. “The tax bill is a big thing on the table. There’s been a lot of talk about the tax bill, but what can actually get done on the tax bill I think is a huge question mark.”

In Wisconsin: unemployment low, employers seeking workers

The Wisconsin economy ended 2024 in good condition. Unemployment was at or below 3% for much of the year, which was below the national average of 4.2%. The workforce participation rate was nearly 67%, which is significantly higher than the national average at 62.5%.

The state had a net gain of more than 23,000 jobs for the year.

Economic conditions in the state parallel national trends. The Wall Street Journal conducted a national survey of economists, who predicted the national unemployment rate to remain below 5% and the chances of a recession to be roughly 22%.

Will inflation go down?

Inflation is another area that got a lot of attention during the presidential race. Under President Joe Biden inflation rose at an incredible pace, but following action from the Federal Reserve, it slowed down. However, prices remain stubbornly high and shoppers are still feeling the impact.

Jeff Cressman, executive director and head of Wisconsin commercial banking at Wells Fargo, said inflation is likely to continue to be a challenge.

“I don’t think we’re going back to what the prices were two, three, four years ago. So businesses and consumers are going to have to get used to that,” Cressman said. “There’s differences in the pockets of the economy where inflation was more severe than others. Right now, it seems like the service sector seems to have the biggest components of inflation where initially I think it was in goods and manufacturing.”

In Wisconsin, it’s been difficult for companies to find the workers needed to fill the open positions. It’s a challenge that’s been around for the last several years and one that is going to continue throughout 2025 and beyond.

“It’s hard to expand your plant if you can’t find the next 50 or 100 employees to run those machines, and that trend just continues,” Cressman said.

Wisconsin’s unemployment rate has been around 3% throughout 2024, which has made hiring difficult. As a result of the low unemployment rate, businesses are likely to raise wages and increase benefits to lure workers from one job to another.

“We still don’t have a ton of people to fill jobs,” said Brent Schutte, chief investment officer at Northwestern Mutual. “When that typically occurs, what ends up happening is you have to raise wages. Which is a good thing until it isn’t.”

What about a recession?

As has been the trend for the last several years, there has been discussion of the “R” word – recession.

Specifically, if a recession will or will not happen.

“Our customers are less fearful of an imminent recession today than they were 12 months ago,” Cressman said. “They’re spending a lot of time trying to assess what this new political landscape could look like.”

For some in the industry, they are not expecting a recession to occur this year.

“A recession in 2025 would be a surprise,” Ceci said. “But it’s not impossible. Usually those things come about because of some unexpected shock whether it’s a bubble in the market or some weird financial thing like we had in ‘08. There’s usually a catalyst to it.”

For Schutte, who expected a recession last year that never came, he thinks one is coming but he’s unsure of the timing.

“No one knows exactly when it’s going to happen, but at some point, there will be a recession. Will it be in 2025? We’ll see,” Schutte said. “There’s still conditions that can cause a recession, and I don’t think those risks are magically gone because we turned the calendar page.”

As seen in USAToday.com