Officials including President Obama have recently stated the economic crisis that has gripped the country might be bottoming out.
However, financial indicators across Wisconsin point toward some uncertainty and tough decisions for several months ahead, with no recovery guaranteed, according to numerous economic observers.
Dean of the Wisconsin School of Business Michael Knetter said in an e-mail the most affected areas of the state include the eastern corridor between Kenosha and Green Bay, with industries like durable goods, heavy machinery and car manufacturing hit hard.
Unemployment data is already showing those areas facing difficult times. Beloit, less than an hour from Madison, has the highest unemployment rate in the state at over 16 percent, according to recent statistics from the state Department of Workforce Development.
In nearby Janesville, where the General Motors manufacturing plant is set to close in the coming months, unemployment has ratcheted up to 14 percent from six percent a year ago.
Knetter said he hopes for signs of recovery by mid-summer, but that it might take another six months after that for labor markets to improve. He said state officials are obligated to pass a balanced budget and support should be given to help businesses.
""The best response is to make sure we are doing what we can to create a transparent and open climate for business creation and making sure that we take advantage of whatever federal support is being offered,"" he said.
UW-Madison professor of public affairs and applied economics Andrew Reschovsky also said unemployment problems are compounded by the strain they put on state governments. He said state lawmakers might face the difficult decision of raising taxes or ""cutting services when people need them the most.""
Yet states gain most of their funds from tax revenues, according to Reschovsky, which decrease as more people become unemployed or buy fewer products.
He said this problem is the reason why the recently passed federal stimulus package contained millions of dollars to aid state governments. State lawmakers would be forced to make significant cuts to areas like K-12 education without the federal help, Reschovsky said.
Robert Krainer, UW-Madison professor of finance, said an increase of 1,000 points or more in the Dow Jones stock index would be needed to show the crisis is leveling off, and even then only if investors stayed confident the gains would not evaporate quickly.
Krainer said even with a return of confidence to the financial markets, unemployment might not decrease for months afterward.
""Some people are talking about 10 or 10 and a half percent unemployment in the months ahead. If that materializes before the market comes back, that could result in more retailers going bankrupt,"" he said.
