The Recovery in Wisconsin

Output is still below peak levels.

First, note that Wisconsin GDP has not reattained pre-pandemic levels.

Figure 1: Wisconsin GDP (blue), 2018-19 trend (gray line), and Economic Outlook forecast from November (red squares), all in mn.Ch.2012$ SAAR, against log scale). NBER defined recession dates peak-to-trough shaded gray. Source: BEA, WI Department of Revenue, NBER, and author’s calculations.

Wisconsin GDP as of Q3 was 0.9 percent below 2019Q4 (NBER peak), and 3.8% below the 2018-19 trend. In contrast, US GDP is 3.1% above 2019Q4 levels (and the Great Lakes BEA region,  encompassing Wisconsin, is 0.5% above). Despite this, certain policymakers are arguing that the further government spending is not needed. Further, they argue the state’s budget surplus should motivate tax cuts, but in the next, not current, two year budget period (for some reason). As noted here:

“The surplus news reflects the unwillingness of the Legislature to invest the money as the federal government intended,” explains University of Wisconsin economist Laura Dresser, associate director of COWS. “It exists because we didn’t invest what we should have, especially for schools. It’s so overdue and desperately needed.”

By withholding money from local governments and especially local public school districts — which received an unprecedented zero increase in the current, two-year budget, the Republicans have let billions of dollars pile up in state coffers, unspent, while continuing to enforce completely unnecessary austerity measures.

Has government spending on goods and services been extravagant, given the challenges faced by Wisconsin residents? Real government spending is 3.8% below 2019Q4 levels.

Figure 2: Wisconsin state and local government spending on goods and services, mn Ch.2012$ SAAR (blue, left log scale), and  state and local government employment (red, right log scale). NBER defined recession dates peak-to-trough shaded gray. Source: BEA, BLS, and NBER. 

State and local government employment in Q4 is down 4.2%.

 

 

45 thoughts on “The Recovery in Wisconsin”

  1. pgl

    State fiscal austerity is rarely a good idea. Now that NY is recovering maybe we can import more of your state’s wonderful products.

    1. James

      Dear PGL – I know someone who does award winning artisan cheese and you can order a gift box – Landmark Creamery – in Paoli, WI https://landmarkcreamery.com/ By the way, I still consider upstate NY sharp cheddar better than any cheddar in Wisconsin – maybe because we would go for Sunday drive to pick MacIntosh apples and get sharp cheddar. There a few good WI cheddars but most is commodity grade IMO.

  2. rsm

    Is it so wrong to ask if Wisconsin’s GDP consists of 90% torturing animals to overproduce dairy product that Canada has to be forced to buy, and 10% economic professors churning out manure posts on the internet?

    2. Anonymous

      rsm,

      thanks for the chuckle.

      it will make the whiskey go down better after today on the markets….

    3. James

      Dear RSM – I agree that the milk subsidies in U.S. are wrong. And on top of that forcing Canadians to buy our subsidized milk and destroying local farm producers is wrong. Also the pandemic has shown that long supply chains for dairy is problematic leading to shortages. And the environmental costs of larger farms is an external cost that no one wants to account for and is problematic. However – I do think smaller farms in Wisconsin with on-farm feed production have an advantage over mega dairies in other US states that depend on hay production using scare water resources. IMO – the answer is to stop focusing on yield at all costs and start focusing on external costs – in dairy – returning manure to the soil in a sustainable way (WI dairy farmers – stop spreading manure on snow – it just leads to run off during thaws) and let’s rethink and redo our national refrigerated supply chain – it is producing a huge amount of emissions, Also consider alternatives to dairy products – soy milk for example. Also – I thought it was completely wrong-headed for Scott Walker/WI GOP to give tax breaks to dairy producers to increase production when we had an oversupply of milk https://urbanmilwaukee.com/2019/03/13/data-wonk-how-walker-trump-hurt-dairy-industry/ leading to more consolidation and more focus on yield.

  3. pgl

    FRED provides the nominal cost of medical care over time, which of late has not been rising as fast as the general consumer price index:

    https://fred.stlouisfed.org/series/CPIMEDSL

    Kevin Drum took this nominal price series relative to the overall price index to provide a chart of how the “net medical care” price index (inflation adjusted) has evolved since 1995. Real medical price increases have averaged 1% per year during this period. Biden is trying to finally have real medical care prices decline. Last year was a decent start.

    1. pgl

      “Real private weekly earnings for United Kingdom, 2000-2021”

      Notice how far this fell from 2008 to 2014? Back in the EV days JohnH was praising Cameron’s austerity for lowering inflation which he insisted over and over again was leading to higher real wages in the UK. Of course we would point this clueless wonder to the excellent discussions from Simon Wren Lewis who noted otherwise. But JohnH kept telling us Simon was wrong and Cameron’s policies were great for labor.

      Today when we remind him of how wrong he was – what does he do? Deny he ever made those comments. Go figure!

  7. ltr

    https://news.cgtn.com/news/2022-02-03/Chinese-mainland-records-39-confirmed-COVID-19-cases-17ltXeNWrbG/index.html

    February 3, 2022

    Chinese mainland reports 39 new COVID-19 cases

    The Chinese mainland recorded 39 confirmed COVID-19 cases on Wednesday, with 21 linked to local transmissions and 18 from overseas, data from the National Health Commission showed on Thursday.

    A total of 96 new asymptomatic cases were also recorded, and 855 asymptomatic patients remain under medical observation.

    Confirmed cases on the Chinese mainland now total 106,241, with the death toll remaining unchanged at 4,636 since January last year.

    Chinese mainland new locally transmitted cases

    https://news.cgtn.com/news/2022-02-03/Chinese-mainland-records-39-confirmed-COVID-19-cases-17ltXeNWrbG/img/13ba38f174244422adac6fbc25ca1a6b/13ba38f174244422adac6fbc25ca1a6b.jpeg

    Chinese mainland new imported cases

    https://news.cgtn.com/news/2022-02-03/Chinese-mainland-records-39-confirmed-COVID-19-cases-17ltXeNWrbG/img/6252ac04c93848bea011cadf90a7a79d/6252ac04c93848bea011cadf90a7a79d.jpeg

    Chinese mainland new asymptomatic cases

    https://news.cgtn.com/news/2022-02-03/Chinese-mainland-records-39-confirmed-COVID-19-cases-17ltXeNWrbG/img/7f14cfba7d36419dbb0ea033a784a9ce/7f14cfba7d36419dbb0ea033a784a9ce.jpeg

  8. Manfred

    Says a commenter:
    “State fiscal austerity is rarely a good idea.”

    Ok, but this statement forgets that the vast majority of states (I think Vermont is an exception) have balanced budget requirement, that are very strict.
    And the reason they have it is because an experience many states had in the 1840s and 1850s, when some (mostly midwestern) states overstretched themselves in debt. [They asked for a bailout from Congress, and Congress said no – which would never happen in today’s mindset.]
    My state may not borrow for operating expenses, nor is it allowed to run a deficit. If it runs one, it must cut expenses immediately. Borrowing (GO Bonds) is only for capital expenses, and must be approved by the State Bond Commission.
    The upshot is – there is a reason why state are fiscally austere, a reason rooted in history.

    1. pgl

      Leave it to the MANFRED to justify Hebert Hoover fiscal policy because of something that occurred two centuries ago. Thanks for the chuckles dude!

    2. pgl

      “They asked for a bailout from Congress, and Congress said no – which would never happen in today’s mindset.”

      I guess Gerald Ford saying no to NYC happened in the 19th century too! But I see the MANFRED never heard of the concept known as a Fiscal Union.

  9. pgl

    BLS reports on unit labor costs for the last quarter of 2021 – they grew at a rate of only 0.3% per annum despite the fact that hourly compensation is growing by 6.9% per year. Of course they are nominal figures. Real compensation was basically flat given the high reported inflation rate.

    https://www.bls.gov/news.release/prod2.nr0.htm

    Yes we are seeing productivity growth at 6.6% per year with a lot of it likely being captured by profits.

  10. Moses Herzog

    I buy Calypso lemonade, Wisconsin cheese, Andies Mints, and I’d buy Milwaukee beer if I could find a cheap one at my supermarket. Right now I teeter between $2.62 (??) Heineken and $2.62 (??) Modelo waiting for that Milwaukee beer to show up somewhere.

    OMG, I am watching this “Wonder Showzen” show. I was over in China when it first ran so I didn’t know about it. I am about dying laughing watching this thing. Warning: You have to be totally sick in the head to watch this stuff. I totally qualify on those grounds. The puppet going after the joggers. I could go into other things here but…… I’m a Democrat, voted for Jerry Brown, voted for Paul Tsongas, voted for Obama, others…. to go back to this era where people weren’t so sensitive about HUMOR. This show is awesome. You know why people get so cranky now and explode over the smallest of things?? Because no one can laugh about this stuff anymore. All we have is 3 year olds who want to get upset about everything. They’ve been emotionally damaged for life because someone put shaving cream in their shoes. But then, when I was about age 10 my Dad let me watch Benny Hill, so whatever. My cranky depression era, former Sunday school teacher (where he met my Mom) Dad let us watch Benny Hill. Now half of America’s Moms are afraid their children will die on the spot if they eat an ingredient that occurs NATURALLY in bread. Go figure people.

    1. Bruce Hall

      It’s been well over 50 years since I lived in Wisconsin, but I still order packages of Usinger’s and Nueske’s meats. I do miss the days when you could get a ground raw round steak on rye bread with a big slab of onion. Mmmm. But Milwaukee beers? Not so much, except the Schlitz bock beer that was made just once a year to clean out the vats… heavy and caramelly, not like the modern versions. Now it’s either a good ale or red wine.

      Geez, now you got me all hungry and nostalgic. I’m going have to order some of this: https://www.nueskes.com/hickory-smoked-pulled-pork-and-beef-brisket-3-lbs-/

      1. Moses Herzog

        : )

        I miss Taylor’s Maid-Rite up in Marshalltown Iowa. It’s just hard to recapture that taste from your youth, but if it’s out there somewhere, for me, that’s where it is. If you’re ever in that area, driving by East of the interstate 35, you gotta try it.

  11. Moses Herzog

    In the good news department:
    https://www.npr.org/2022/02/03/1077825951/the-u-s-has-conducted-a-counterterrorism-operation-in-syria

    This is why it’s important for women to make good choices when finding a husband. The coward blew up his wife and children during the U.S. military raid. I guess donald trump never got around to getting this guy because he was busy diverting military funds and resources to a southern border wall that stopped NO ONE from crossing into the USA. Thanks MAGA illiterates!!!!

    1. Moses Herzog

      BTW, have any of these illiterate MAGAs and QAnons found the money payment Mexico gave the USA for the southern border wall that was engineered by Britney Spears?? Britney put a lot of personal thought into the engineering of that southern border wall to make sure the base eroded at the proper rate, and she wants her money that donald trump promised Mexico would pay her.

    2. Anonymous

      war is government sanctioned murder, and the link between taking out an isis “leader” and your safety is spider web thin.

      npr is more thorough than most reports mentioning syrian province idlib most leave out idlib and say nw syria.

      which is interesting because idlib is to syria as donbas is to ukraine, a separated province, that way because of us support for “syrian rebels”.

      the rulers there are largely al nusra which is vaguely a tribe of al qaeda whatever that is these days

      biden regime is projecting on russia over ukraine what the usa did in 2013 to syria…….

      the main reason you should sleep well tonight is us strike command controls a thousand mirv’ed icbm’s and several trident armed submarines ‘on station’ to blow up the world should you get in deep trouble.

      an h bomb or a spec ops raid, thereu are dead either way,

      God help us…..

      1. Moses Herzog

        While I agree with you, America’s killing of an ISIS coward that murdered his own wife and children, is rather boring as killing filthy disease carrying mosquitos to most Americans. But it still feels good killing small insignificant filthy animals. Because people with zero intelligence and zero values in life don’t get very far, the ISIS leader’s death isn’t worth too much thought. I think things like this are much more interesting to Americans in recent years:
        https://en.wikipedia.org/wiki/The_Red_Web_(book)

        https://www.barnesandnoble.com/w/the-red-web-andrei-soldatov/1121289037

        https://www.amazon.com/Putins-Trolls-Frontlines-Russias-Information/dp/1632461293

        https://journals.sagepub.com/doi/pdf/10.1007/s12290-016-0395-5

        https://www.foreign.senate.gov/imo/media/doc/SFRC%20Dem%20staff%20report%20on%20Aro%20-%203-28-19.pdf

        Why did donald trump rescind Jessikka Aro’s IWOC Award?? Is it strange that donald trump punishes a woman who exposes the misinformation tactics Russia and Putin use online??~~or just very typical behavior for the orange abomination who squatted in the White House after 2016?? You seem to have all the answers, let us know.

      2. Moses Herzog

        Also, I hope the blog hosts will permit me in inquiry to “Anonymous” for mainly my own personal entertainment and late night giggles. “Anonymous” while you have the time worry about Americans’ safety so much, I assume you are not one of the Russians with this problem in life??
        https://www.themoscowtimes.com/2019/04/02/indoor-plumbing-still-a-pipe-dream-for-20-of-russian-households-reports-say-a65049

        If you do have this problem, I hope you acquire this technology someday without the need of hacking the U.S. Pentagon.

        1. Anonymous

          “sleep well tonight” is a thing we wished americans as we stood the “ramparts of freedom” servicing our alert bomber in cold dark isolated places so the soviets would not push you around.

          in my youth draping out over a log on a cold morning had a simple sense of ease…… out houses were far between.

          in deer camp we have a 2 holer!

          not sure the log is a thing as i get maturer.

  12. macroduck

    Off topic –

    Unit labor costs up just 0.3% (SAAR) in Q4. End of the inflation story? No. Just more of the same Q4 story. Highly distorted output series leads to disortions in series based on output.

    Hourly labor compensation rose 6.9% (SAAR) in Q4. Yay! After adjusting for inflation, hourly compensation fell 1.2% (SAAR). Crud.

    1. pgl

      Nominal compensation increased by 6.9% per annum per the same report. It would be nice if productivity was permanently increasing that fast but I suspect your interpretation is more realistic.

    2. pgl

      Check out the latest post. I think we inspired it in a way but Dr. Chinn takes the very long-run (75 year) view!

  13. T. Shaw

    WI is not alone.

    Forty-five other US states have not recovered from the COVID lockouts.

    UT, ID, TX and AZ have recovered.

  14. pgl

    The other day in his infinite rants about the Federal Reserve allegedly losing bundles on MBS (never mind he could not bother to read an income statement or balance sheet to save this fact free life) he changes subjects with some bizarre question about FNMA avoiding bankruptcy without adding to the Federal debt. My first reaction was WTF is this troll babbling about now. But of course he never said what he meant likely because he had no effing clue what he was writing as usual. I’m taking a guess what this incoherent clown was babbling about but here is a very interesting discussion of Fannie Mae’s financing back in the day:

    https://sgp.fas.org/crs/misc/RL34661.pdf

    Take a read for yourself as I’m sure this babbling fool will asks his weird question again – even if I doubt he bothers to read this report.

  15. Macroduck

    Top of A2, WSJ: “U.S. Consumers Begin to Pivot to Services”

    Subtitle: “Economists expect the shift to accelerate, reducing pressure on supply chain, inflation”

    So apparently author Harriet Torry reads this blog?

    I suspect other articles, including the ones about hedge funds getting clobbered in January, big stock drops for Meta and PayPal, are pretty directly related to news of normalization in the real economy.

      1. Bruce Hall

        I’ll take your word for it since I don’t have all of the states’ data downloaded. Although I’m not sure what you are looking at.

        I’m guessing maybe this or something similar: https://fred.stlouisfed.org/series/WIRQGSP (adjusted for inflation) which shows an 0.9% decline.

        Michigan’s change was also very slightly negative during that period so it’s not like either of the rust belt states were setting the world on fire.

          3. Bruce Hall

            I’m a little lazy about downloading large tables so I just let the site do the work:

            Bureau of Economic Analysis

            SQGDP9 Real GDP by state 1/

            Compound annual growth rate between any two periods

            State or DC

            GeoFips GeoName LineCode Description 2019:Q4-2021:Q3
            55000 Wisconsin 1 All industry total -0.7
            55000 Wisconsin 2 Private industries -0.8
            55000 Wisconsin 3 Agriculture, forestry, fishing and hunting (D)
            55000 Wisconsin 6 Mining, quarrying, and oil and gas extraction (D)
            55000 Wisconsin 10 Utilities -6.1
            55000 Wisconsin 11 Construction -0.8
            55000 Wisconsin 12 Manufacturing 1.1
            55000 Wisconsin 13 Durable goods manufacturing 1.3
            55000 Wisconsin 25 Nondurable goods manufacturing 1.0
            55000 Wisconsin 34 Wholesale trade -0.2
            55000 Wisconsin 35 Retail trade -4.9
            55000 Wisconsin 36 Transportation and warehousing -1.7
            55000 Wisconsin 45 Information 2.7
            55000 Wisconsin 51 Finance and insurance 0.9
            55000 Wisconsin 56 Real estate and rental and leasing -0.1
            55000 Wisconsin 60 Professional, scientific, and technical services 2.3
            55000 Wisconsin 64 Management of companies and enterprises 2.0
            55000 Wisconsin 65 Administrative and support and waste management and remediation services 2.5
            55000 Wisconsin 69 Educational services -6.1
            55000 Wisconsin 70 Health care and social assistance -0.5
            55000 Wisconsin 76 Arts, entertainment, and recreation -3.5
            55000 Wisconsin 79 Accommodation and food services -7.9
            55000 Wisconsin 82 Other services (except government and government enterprises) -4.8
            55000 Wisconsin 83 Government and government enterprises 0.3
            55000 Wisconsin 84 Federal civilian 1.0
            55000 Wisconsin 85 Military 7.8
            55000 Wisconsin 86 State and local 0.0

            That may not be what you had in mind.

          4. Menzie Chinn Post author

            Bruce Hall: The table I was sending you to provided all the real GDP series for all the states and BEA regions, from which you could then calculate the percentage change.

          5. Bruce Hall

            I did go to the original link you sent and it had several choices:

            QUARTERLY GROSS DOMESTIC PRODUCT (GDP) BY STATE
            Gross Domestic Product (GDP) summary (SQGDP1)
            GDP in current dollars (SQGDP2)
            Real GDP in chained dollars (SQGDP9)
            Chain-type quantity indexes for real GDP (SQGDP8)
            Contributions to percent change in real GDP (SQGDP11)
            QUARTERLY PERSONAL INCOME BY STATE
            ANNUAL GROSS DOMESTIC PRODUCT (GDP) BY STATE
            ANNUAL PERSONAL INCOME AND EMPLOYMENT BY STATE
            GROSS DOMESTIC PRODUCT (GDP) BY COUNTY AND METROPOLITAN AREA

            I selected: Real GDP in chained dollars (SQGDP9)

            Then let the site run the numbers.

            I ran Illinois, Wisconsin’s next door neighbor, for comparison:

            SQGDP9 Real GDP by state 1/
            Compound annual growth rate between any two periods
            Bureau of Economic Analysis
            State or DC

            GeoFips GeoName LineCode Description 2019:Q4-2021:Q3
            17000 Illinois 1 All industry total -0.2
            17000 Illinois 2 Private industries -0.1
            17000 Illinois 3 Agriculture, forestry, fishing and hunting 49.7
            17000 Illinois 6 Mining, quarrying, and oil and gas extraction -4.6
            17000 Illinois 10 Utilities -5.5
            17000 Illinois 11 Construction -1.4
            17000 Illinois 12 Manufacturing 2
            17000 Illinois 13 Durable goods manufacturing 0.2
            17000 Illinois 25 Nondurable goods manufacturing 3.8
            17000 Illinois 34 Wholesale trade -1.8
            17000 Illinois 35 Retail trade -3.4
            17000 Illinois 36 Transportation and warehousing -7.9
            17000 Illinois 45 Information 7.5
            17000 Illinois 51 Finance and insurance 3.1
            17000 Illinois 56 Real estate and rental and leasing -1.9
            17000 Illinois 60 Professional, scientific, and technical services 3
            17000 Illinois 64 Management of companies and enterprises 1.5
            17000 Illinois 65 Administrative and support and waste management and remediation services 4.7
            17000 Illinois 69 Educational services -5.6
            17000 Illinois 70 Health care and social assistance -0.6
            17000 Illinois 76 Arts, entertainment, and recreation -12.6
            17000 Illinois 79 Accommodation and food services -7.5
            17000 Illinois 82 Other services (except government and government enterprises) -6
            17000 Illinois 83 Government and government enterprises -1.3
            17000 Illinois 84 Federal civilian 0.3
            17000 Illinois 85 Military 0.2
            17000 Illinois 86 State and local -1.7

            The data are close enough to what you were pointing out so I’m not questioning that. Strangely, these data show that Illinois reduced State and Local government spending why Wisconsin held steady, yet Wisconsin dropped more than Illinois overall. Some other issues at play?

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