Is Dane County's economy on the mend?

Experts say the recession has bottomed out nationwide, but Madison area residents may wonder if the financial corrosion is starting to heal here, as well.

The State Journal took a look at key data and talked to several economists, and found there are some positive signs in Dane County:

• Unemployment hit a peak of 6.3 percent in June; by December it was down to 5.4 percent.

• After a dismal 2009, new home construction permits in Dane County for December and January were at least double those of a year ago. Figures for February also are up, with a 43 percent increase over the same month last year.

• Existing home and condominium sales increased 2.2 percent in 2009 over 2008. In January, they rose 21 percent over January 2009.

• 2.1 percent more passengers flew out of the Dane County Regional Airport in 2009 than 2008. The trend continued this January, with a 2.7 percent rise.

Even though it can't be measured, some say there's a feeling of optimism among merchants and restaurateurs.

But problems remain. The jobless rate is still nearly twice its usual level. The number of foreclosures filed in Dane County fell 18 percent in January, compared with a year ago, marking the first decline in foreclosures in nearly three years. But in February, they snapped back up, rising 32 percent over February 2009.

Annual vehicle sales in 2009 lagged the previous year's by 12.9 percent despite the federal "Cash for Clunkers" program. Bankruptcies filed in U.S. District Court in Madison ended 2009 about 30 percent higher than the prior year.

Social service programs, including local food pantries, say there's been a big jump in the number of people who need help.

"Every day that we're open, we have new people that are just laid off," said Jenny Czerkas, director of The River Food Pantry, 2201 Darwin Road.

The pantry had 21,680 household visits in 2009, up from 13,380 the year before. Each family can get food once a week. "A two-hour wait (to get inside) is not uncommon," Czerkas said.

At the Salvation Army of Dane County, a recent opening for a "low-paying," part-time food pantry coordinator drew 81 applicants, one-third of whom had college degrees. Some even had master's degrees. "We've never seen that before," said Ruth Ann Schoer, director of major gifts.

‘Recovery is occurring'

Several economic indicators for the Madison area are beginning to improve but it will be a while before the area is back to its usual, robust self, three economists told the State Journal.

"We think the recovery is occurring. We are seeing a little more steam in it (than a month ago). But it's certainly not a robust recovery," said Dennis Winters, chief of the Office of Economic Advisors with the Wisconsin Department of Workforce Development.

"I classify Madison right now as being in recovery," said Morgan McGowan, associate economist with Economy.com, in West Chester, Pa. "The economy has reached that trough and is starting to build back the production that was lost during the recession."

"I think we're on the edge of it," said David J. Ward, president of NorthStar Economics, Madison.

Consumers have held back on spending, paying down debt for 11 straight months at "pretty much a record pace," Ward said. "It's not so much that people are, necessarily, hurting but they're cautious. Those who are working are thinking, ‘Well, it wouldn't hurt to have a little more cash.'"

Large purchases are being delayed, McGowan said, but he expects in the second half of 2010, people will buy things like appliances.

At Madison's two biggest malls, shoppers were not shy about exercising their wallets during the Christmas season, said Tiffany Bernhardt, marketing specialist for East Towne and West Towne.

"We actually had a very strong December at both properties," she said. Sales were up, Bernhardt said, but would not say how much.

Restaurateurs optimistic

Restaurants in the Madison area had a tough time in 2009, with revenues down from 2008, based on anecdotal reports, said Ed Lump, president and chief executive of the Wisconsin Restaurant Association. Upscale restaurants struggled more than others, he said, because consumers consider higher-priced restaurants a luxury, saved for special occasions, and corporations are buying fewer business meals.

"Most restaurant owners that I've talked to are, in a sense, relieved because it could have been worse," Lump said. "There's more optimism that things will improve this year."

For local home builders, "it's been a definite challenge," said Abe Degnan, of Degnan Design Builders in DeForest, president of the Madison Area Builders Association. "Jobs are not easy to come by."

Remodeling projects have been smaller than usual but there have been more of them, and larger-scale remodeling projects are up for the first time since 2007, Degnan said. "I've had more remodeling in the city of Madison than I have in several years," Degnan said.

New home construction also is showing signs of life. Building permits for single-family homes and duplexes in Dane County rose in December, January and February over the year before, said Dominic Collar, co-owner of MTD Marketing, a Neenah firm that tracks the figures.

Sixty-five permits were issued in December, up from 20 in December 2008; 42 in January, up from 21 in January 2009; and 53 in February, compared to 37, a year earlier. That's still sharply below the average of 120 to 170 permits for those months between 2000 and 2005, but it's a promising sign, Collar said.

"The first quarter of every year gives you a tremendous indication of how the year is going to go," he said. "It's 25 percent or less than what they had been doing, but it's still a nice jump from last year."

Job outlook weak

But the job outlook is not as rosy yet. Workers were downsized from jobs at 763 companies in the six-county region of Dane, Columbia, Sauk, Jefferson, Dodge and Marquette counties from February 2009 through January 2010, up from 355 companies during the previous 12 months. That's the number of businesses whose laid-off workers came for help at job centers in the region, said Pat Schramm, executive director of the State Workforce Development Board of South Central Wisconsin.

"It's the smaller businesses that are letting people go," said Schramm. "We do not think it's ending."

Statewide, new jobs are being created but not enough to keep up with the job reductions, said state economist Winters.

About 132,000 jobs, on average, were added every three months in Wisconsin in 2009 but 150,000 jobs disappeared during the same period, based on U.S. Bureau of Labor Statistics data.

"There are very few indicators that anybody is hiring in earnest," Winters said.

While it's common for hiring to lag behind production and sales rebounds as a recession ends, it's also a critical factor in a recovery. "For most people, that's the big one: if you've got a job or not," Winters said.

It will take a long time to replace the jobs that have been lost, said Economy.com's McGowan. But he predicts growth in the Madison area's economy in the second half of the year, with improvement in the labor market, consumer confidence and business profitability.

NorthStar's Ward also sounded an upbeat, if cautious, note, saying the Midwest has less to recover from than the East and West coasts. "Eventually you get through these things," he said. "I'm optimistic; it's just going to take a while."