“The Future’s So Bright, I Gotta Wear Shades”

That’s what Governor Walker said today about Wisconsin’s economy, quoting from a 1980’s song. This was apparently spurred by DWD’s release “Wisconsin Employment Reaches All-Time High in November”. This statement is true, when referring to the relatively imprecisely measured household survey figures [1]. It is not true when referring the (more precisely measured) establishment series.

Here are trends in nonfarm payroll employment in Wisconsin, its neighbor Minnesota, and the US:


Figure 1: Log nonfarm payroll employment in Minnesota (blue), Wisconsin (red), and US (black), seasonally adjusted, 2011M01=0. Source: BLS, DWD, DEED, and author’s calculations.

Private nonfarm payroll employment exhibits similar patterns.


Figure 2: Log private nonfarm payroll employment in Minnesota (blue), Wisconsin (red), and US (black), seasonally adjusted, 2011M01=0. Source: BLS, DWD, DEED, and author’s calculations.

In Wisconsin’s case, current employment levels are below March 2016 levels.

The relevant comparison is where employment is relative to a counterfactual. I construct a counterfactual using the dynamic (out-of-sample) forecast generated from an error correction model estimated using private Wisconsin and US employment over the 1994-2010 period (see discussion in this post). The counterfactual is shown in red in Figure 3 (with 90 prediction interval).


Figure 3: Private nonfarm payroll employment in Wisconsin (dark blue), and out-of-sample dynamic forecast (red), and 90% prediction interval. Source: BLS, DWD, DEED, and author’s calculations.

The upshot of this graph: Wisconsin private NFP employment is (statistically) significantly lower than what should be expected, based on historical correlations.

As of November 2016, Wisconsin is 55,000 below the number of new private sector jobs Governor Walker promised in August 2013 for January 2015.


Figure 4: Wisconsin private nonfarm payroll employment (red), and trend consistent with Governor Walker’s 250,000 new private sector jobs promise (black). Source: DWD, author’s calculations.

By the way, the song refers to an imminent nuclear war…

9 thoughts on ““The Future’s So Bright, I Gotta Wear Shades”

  1. c thomson

    With the election and the ridiculous WI recount over, surely you can drop your obsession with Gov. Walker?

    Why would anyone care about this stuff?

    Why not focus on finding some viable Dem candidates under 70?

    1. Menzie Chinn Post author

      c thomson: As far as I know, Governor Walker remains in power through January 2019. Should we not care about the performance of the Wisconsin economy? May not be important to you, but a few folks in this state might.

  2. baffling

    “Why would anyone care about this stuff?”

    because next year we will have another idiot try to repeat the policies of walker and brownback, claiming these are successful policies. this happened with the reagan supply side, trickle down economics. those supply side policies actually did not do what was argued. but we continue to have revisionist history which argues those policies were a dramatic success.

    1. c thomson

      With all our anointed experts pointing out the flaws in these policies, no doubt the 2016 electoral result will be overturned in the first mid-terms? Or at the latest by 2020. By then the economy should be in free fall, just as predicted, or the policies an obvious failure

      So why not just hang in there until 2018? watch the hated Republicans discredited and Paul Krugman put in charge – if Larry Summers is too busy?

      Of course, Obie’s policies don’t seem to have satisfied all that many voters either apart from Paul so maybe something a little fresher might play better? Presented by someone who isn’t 100% boring and is under 60? Maybe not selected mostly for gender or skin color either?

  3. Erik Poole

    Walker must be a fan of the Bulletin of the Atomic Scientists. It is once again 3 minutes to midnight. As it was in 1984.

  4. Jake fomerly of the LP

    If you look at Midwestern states like Wisconsin that went from Obama to Trump, most badly lag the US in job growth. That economic anxiety thing has some basis in fact.

    And almost all are run by Walker-like Republicans, who are supposed to be the model that Trump is to follow economically. It’s almost like these ALEC-owned govs messed up their states’ economies so that Obama could be blamed. Almost…

  5. Samuel

    The other side of this is that tax revenue is down given mix of low pay jobs. Roads, public schools and other state services suffer but GOP admin can blame state govt. workers rather than govern responsibly.

  6. sherparick

    I don’t think governors of states boasted like this in the 1960s and 70s because it was just assumed that in a growing economy every year would set a new record for jobs so everyone would go “duh!!” But of course, that was the era when national economic policy governed by “Old Keynesian” thinking and 90% of what Americans consumed was produced or grown in America and “net exports” actually added to GDP, not subtracted from it.

    Then came the 1980s, 90s, and Oughts and the great outsourcing of industry. No more car factories in Janesville and Kenosha. No more steel mills and machine tool plants in Milwaukee. Even the breweries have been outsourced. Particular state policies may have hurt or ameliorated this trend, but it was great national and international trends, none more than the “Strong Dollar Policy” that both Republican and Democratic administrations have shared since Reagan. We the great vacuum of China post WTO and permanent favorite nation status (thank you President Bill Clinton and the Newt Gingrich Republican Congress), Wisconsin started seeing private sector jobs decline and those that remained paid less and had less benefits due to the downdraft. Unfortunately, this worship of the Dollar has continued under Obama and it is now about to be put on steroids by the Fiscal, Tax, and Monetary policies of the Trump administration. http://blogs.cfr.org/setser/2016/12/20/appreciate-the-disaggregated-dollar/

    As a result, I am afraid Wisconsin is in for a rough two years, at a minimum, as their manufacturers and agricultural producers lose export markets and face a flood of cheap imports in the domestic market. But the 6 billionaires that control the Wisconsin Republican Party will do well. And also no more abortions (at least no more legal, safe ones).

    Does Walker intend to run for a 3rd term or challenge Baldwin for the Senate seat?

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