A Study in Contrasts: Four States Q1 GDP

According to data released today, Wisconsin ranks 40th in the first read on 2018Q1 state GDP growth. Washington state ranks first (even though it’s ranked 37th for economic outlook in the 2018 ALEC-Arthur Laffer-Steven Mooore-Jonathan Williams Rich States Poor States).

Source: BEA.

Here is the performance of four states I’ve been following, compared against the US.

Figure 1: Log real GDP of Minnesota (blue), Wisconsin (red), Kansas (green), California (teal), and US (black bold), all 2011Q1=0; Rankings in [brackets] are 2018 Economic Outlook rankings from ALEC Williams, Laffer and Moore (2018). Source: BEA, NBER, and author’s calculations.

Notice the lack of correlation between performance and ALEC ranking. Wisconsin, ranked 19th by Laffer-Moore-Williams, lags 47th ranked California. This outcome is representative of a more general pattern, as discussed in this post.

It is interesting to note there is no apparent recession in California, at least using the two consecutive quarters of negative growth rule-of-thumb, contra Political Calculations. More on this in a soon to come post.

23 thoughts on “A Study in Contrasts: Four States Q1 GDP

  1. 2slugbaits

    Not to worry. Trump is promising a $12B bailout for soybean, hog and dairy farmers hurt by his tariff tantrum. Could a Harley-Davidson bailout be far away? Let those blue states like California and New York pay for those free market loving salt-of-the-earth types in rural red districts.

    <I?"Tariffs are the greatest!" – Donald J. Trump

    1. Jesse Livermore


      Wage gains outpacing the national average are not a one-month phenomena for the state, either. Wisconsin averaged a year-over-year increase of 5.7 percent in the first five months of 2018, compared to 2.7 percent for the U.S. For all of 2017, the state averaged an increase of 3.6 percent, while the country averaged 2.8 percent.

      Metro Milwaukee has seen a similar trend, with wages increasing 4.9 percent in May compared to the same time last year and averaging a 5.6 percent year-over-year increase in the first five months of 2018. The region also averaged an increase of 4.1 percent in both 2017 and 2016, outpacing U.S. wage growth both years.

      The wage growth roughly coincides with when the state’s unemployment rate dipped below 4.5 percent. It has continued to trend downward, reaching a seasonally-adjusted 2.8 percent in April and May.

      “We’re not anticipating, at least in the near future, that those numbers are going to get any higher,” Milan said. “We’re anticipating it’s still going to be a struggle to find workers.”

  2. Erik Poole

    You mean ideology-driven economic analysis and forecasting fail to perform? [again]

    For all these years, I thought that rules of thumb, confirmatory bias and ideology were so inexpensive that they would both rational and naturally “efficient”.

  3. Erik Poole

    “Let those blue states like California and New York pay for those free market loving salt-of-the-earth types in rural red districts.” -2sb

    Hilarious, thanks for the chuckle. Though in reality are not industrialized, hi-tech blue states already paying for agricultural red states? Damn welfare bums….

    So, for all those fans of unadulterated speculation, by the end of 2018, are we looking at over US$30 B in agricultural subsidies under the guidance of Supreme Leader la Trumpette?

    1. PeakTrader

      2slugbaits and Erik seem to believe Democrats work in the big cities, while Republicans live in the middle of nowhere.

      The reality is you’ll find mostly Republicans and Independents working in the big cities – fiscal conservatives – with a very large percentage of poor liberals and socialists, who vote for someone like Alexandria Ocasio-Cortez, and just want free jobs housing, healthcare, child care, and many other benefits.

      Thanks for the “chuckle.”

      1. PeakTrader

        Republicans, Independents, and Moderate or Reagan Democrats mostly represent the backbone of the middle class and earn most if the income. They’re the ones, who support the large percentage of poor liberals and socialists.

        1. pgl

          “the middle class and earn most if the income”???

          You meant of not if. Your spelling is almost as horrific as your knowledge of economics. BTW – your statement assumes a distribution of income more equal than what we see in the real world. Which is probably you could not gin up anything to support your latest lie. Troll on!

          1. pgl

            “Constantly making false assumptions is why you’re always wrong.”

            Did I assume your provided zero source for your bogus claim? Oh yea – you did provide a link but your dog ate your homework. Be nice to Fido as he realized whatever links you do provide are from bogus liars like you.

          2. PeakTrader

            Pgl, how can you say it’s a lie when you didn’t reply to my statement?

            You need to start replying to what other people say, not to what you say.

      2. 2slugbaits

        and just want free jobs

        Free jobs??? Forgive me if I’m having a hard time wrapping my head around what that’s supposed to mean. Or were you just throwing together a word salad? How very Trumpian of you.

        1. PeakTrader

          2slugbaits, guaranteed a job, which is essentially a free job.

          Don’t you know anything about socialism 🙂

          1. 2slugbaits

            PeakTrader Then why didn’t you just say “guaranteed a job” the first time? But strangely, based on your previous comments you don’t seem to have any problem with “compelled to take a job.”

  4. pgl

    Hey Vermont is the only state in the east shaded dark blue. I can hear it now over at Thoma’s comment section – Bernie, Bernie, Bernie!

  5. Bruce Hall

    What did North Dakota do wrong? Oil prices rose over the past year, so production should have increased. Oh, wait, it was up from 32 MM barrels in May, 2017 to 38 MM barrels in May, 2018 . https://www.dmr.nd.gov/oilgas/stats/historicaloilprodstats.pdf.

    Yet GDP declined year over year? Ah, the problem was negative growth overall from 2nd qtr. 2015 to 1st. qtr 2017 and then a big blip in 2nd qtr. 2017 followed by a very modest 3rd qtr. https://www08.wellsfargomedia.com/assets/pdf/commercial/insights/economics/regional-reports/regional-midwest-chartbook-20180515.pdf

     Agriculture and energy—two key drivers of North
    Dakota’s economy—have suffered losses in
    recent years. On the bright side, the downturn in
    the energy sector has largely played out and is
    now recovering. Employment growth remains
    negative on a year-over-year basis, although the
    decline is lessening.
     The commodity bust also had a negative impact
    on agricultural areas. The USDA forecasts that
    global supply and demand for corn and soybeans
    will be closer in alignment in 2018, and farmers
    should fare better than in the previous
    three years (well, maybe not). Easing ethanol requirements and
    less public emphasis on renewable fuels also
    creates some downside risks.

    More iffy data on a quarterly basis on a state basis?

    1. 2slugbaits

      Energy was not a major drag on ND GDP. In fact, over the last year it has been pretty strong. The big drops over the last year have come from agriculture (as you noted), construction (probably because of the fading of oil field housing boom), and government services.

  6. Erik Poole

    Comrade Peaktrader: No need to make up nonsense.

    I see the world in terms of special interest groups. Sometimes the objectives of special interest groups coincide with larger social objectives/preferences, sometimes not.

    Farmers and ranchers constitute a very powerful special interest group whose rent seeking abilities are fantastic, really great. Their ability to pollute, ruin watersheds and hammer fish populations, particularly migratory salmonids here in western North America, is unsurpassed.

    The influence of the US agricultural lobby on US trade policy and larger foreign policy is staggering. It is truly unfortunate that NATO has been converted into a vehicle of American special interests.

    1. pgl

      At least our farmers have not attack the Tour de France. Some French farmers did yesterday.

    2. PeakTrader

      Erik, not everyone is a communist – you need to relate better.

      There are actually good regulations, like controlling pollution. Land management, for farming, is also important.

      Maybe, you believe people should starve to save the environment. Yet, I hear nothing from you about Western States being overrun by illegal immigrants and their subsequent children.

      Defending against the communist Chinese isn’t about rent seeking. Don’t be so protective of the commies.

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