2018 has arrived! So as bankers move into the New Year, how did the economy behave in 2017? Let’s review currently available economic data for the U.S. and the midwest states of Illinois, Indiana, Michigan and Wisconsin and see.

U.S. ECONOMY:

• GDP and General Economy: Moderate growth of 2.3% from Q3 2016 to Q3 2017; industrial production index moved up solidly at 3.4%; auto sales down 1% YTD from year ago.
• Federal Reserve: 3 rate hikes and start of balance sheet normalization.
• Interest Rates: Short-end mirrors Fed moves while long end relatively unchanged with yield curve flattening.
• Labor: Unemployment rate down to 4.1% and labor force participation rate up modestly; non-farm jobs up 2 million or 1.4%; hourly wages up 2.3%.
• Banking (link): Loans and deposits up over 4%; capital, loan quality and profitability all solid.
• Housing: Housing permits and starts up +3.7% YTD from year ago; new home sales up strongly at 8.6% YTD from year ago; and housing prices up 6.4% from one year ago. 
• Farm Sector: Income down significantly; crop prices mixed but down substantially from recent peaks; livestock showing some improvement but down from peaks.
• Federal Debt: Cumulative 12 months deficit $685 billion - up 20% from year ago period; federal debt over $20 trillion and 104% of GDP.

2018 Prospective: Hard to beat 2017, but may match that economic performance; Fed rate hikes totaling 3 or 4 with yield curve up but continues flattening. Good economy for bankers.

ILLINOIS ECONOMY:

• GDP and General Economy: Much weaker performance than U.S. with growth of only 0.8% from Q2 2016 to Q2 2017.
• Labor: Unemployment rate for state at 4.7% - well above U.S. level; metro markets generally above national average; non-farm jobs up only 0.3% - well below U.S.; hourly wages up 1.1% - one-half U.S. growth.
• Banking (link): Loans up nearly 5% and deposits up nearly 2%; excellent loan quality; strong capital position; and solid profitability levels.
• Housing: Housing permits up 2.5% YTD from year ago, but below U.S. levels; and housing prices rise well below U.S. - up only 3.7% from one year ago. 
• Farm Sector: Farming income shows loss; crop and livestock prices mixed but down substantially from recent peaks.

2018 Prospective: Below par performance continues relative to U.S. economy. For bankers, good economy, but there will be hurdles.

INDIANA ECONOMY:

• GDP and General Economy: On par performance with U.S. with growth of 2.2% from Q2 2016 to Q2 2017.
• Labor: Unemployment rate for state at 3.4% - significantly below U.S. level; metro markets generally well below national average; non-farm jobs up 0.9% - below U.S.; hourly wages up 2.4% matching U.S.
• Banking (link): Loans up nearly 9% and deposits up nearly 6%; excellent loan quality; strong capital position; and solid profitability levels.
• Housing: Housing permits up 3.5% YTD from year ago nearly matching U.S.; housing prices up 5% from one year ago. 
• Farm Sector: Income down substantially; crop and livestock prices mixed but down substantially from recent peaks.

2018 Prospective: Mirror 2017 and match or outperform U.S. averages. Solid economy for bankers, but moderating forces in the economy will exist.

MICHIGAN ECONOMY:

• GDP and General Economy: Stronger performance than U.S. with growth of 3.2% from Q2 2016 to Q2 2017.
• Labor: Unemployment rate for state at 4.2% - approximates U.S. level; metro markets generally at or below national average; non-farm jobs up 1% - below U.S.; hourly wages up 2.1% - slightly below U.S.
• Banking (link): Loans up 12% and deposits up 5%; excellent loan quality; strong capital position; and solid profitability levels.
• Housing: Housing permits up only 0.5% YTD from year ago; and housing prices nearly matching U.S. - up 6.1% from one year ago. 
• Farm Sector: Farming income shows loss; crop and livestock prices mixed but down substantially from recent peaks.

2018 Prospective: Similar to 2017 while outperforming U.S. averages. Good environment for bankers but more difficult than 2017.

WISCONSIN ECONOMY:

• GDP and General Economy: Nearly on par with U.S. with growth of 1.9% from Q2 2016 to Q2 2017.
• Labor: Unemployment rate for state at 2.8% - dramatically below U.S. level; metro markets generally significantly below national average; non-farm jobs up 1.4% - same as U.S.; hourly wages up solidly at 2.3%.
• Banking (link): Loans up 5% and deposits up nearly 2%; excellent loan quality; strong capital position; and solid profitability levels.
• Housing: Housing permits up only 0.5% YTD from year ago; and housing prices nearly matching U.S. - up 6.1% from one year ago. 
• Farm Sector: Income appears to be stabilizing; crop and livestock prices mixed but down substantially from recent peaks, while Milk up nearly 8% from year ago.

2018 Prospective: Deja vu again; keeping pace with U.S. economy performance. Economy should be good - not great - for bankers, but there will be moderating activity.

For additional analytics, go to our Economic Dashboards.