The Wisconsin Macro Outlook (Updated for Employment Release)

Yesterday, the Wisconsin macro outlook was reviewed in the context of the November Economic Forecast released by the DoR. Today, we can update the picture, using the newly released employment numbers (piece on WPR today).

First, the October decline in nonfarm payroll employment is erased, and November’s number is up, hitting the forecast.

Figure 1: Wisconsin nonfarm payroll employment from October release (bold black), from November release (red), and Wisconsin Economic  Forecast (blue), both in 000’s, s.a. Source: BLS, DWD, and Wisconsin Dept of Revenue Nov. Forecast.

Nonfarm payroll employment growth has been decelerating over time (as shown in Figure 1 with a log scale, the decreasing slope means slowing growth). Forecasted employment will stall out in the later part of 2024, likely due to a slowing national economy marked into the SP Global (formerly IHS Markit) forecast.

The slowdown in September-October also showed up in the civilian employment series, but reversed course in November. Of course, one should never put too much faith in one month’s observation.

Figure 2: Wisconsin civilian employment (bold black), and Wisconsin Economic  Forecast (blue), both in 000’s, s.a. Source: BLS and Wisconsin Dept of Revenue Nov. Forecast.

Notice that the civilian employment series exhibits a lot more variability. It’s important to recall that the state level civilian employment estimates are calculated using a model that differs from the approach used at the national level. This is necessitated by the smaller samples associated with states. In other words, I‘d be very wary of using state level employment series based on the household survey.

That being said, the forecast indicates essentially zero employment growth in 2024Q1.

The employment and labor force errors are probably correlated in a way that the unemployment rates are less volatile. Here’s a comparison of Wisconsin and national unemployment rates. On average Wisconsin has 0.9 percentage point lower unemployment than the national average (consider that a state level fixed effect). Nonetheless, the Department of Revenue’s forecast shows faster increase in unemployment than the Survey of Professional Forecasters’ national rate (in principle, to see how the Wisconsin rate is being driven, one should look at the S&P Global (formerly IHS-Markit) forecast).

Figure 3: Wisconsin unemployment rate from November release (bold black), and Wisconsin Economic  Forecast (blue), national unemployment rate (bold red), and Survey of Professional Forecaster’s forecast, both in %, s.a. Source: BLS , DWD, and Wisconsin Dept of Revenue Nov. Forecast. Philadelphia Fed (November).

The Wisconsin unemployment rose to forecasted levels, while the national rate is below the November SPF level.

The employment data is backward looking, to early-mid November. More up to date reading on the Wisconsin economy is provided by the Baumeister/Leon-Leiva/Sims Weekly Economic Conditions Index:

Figure 4: Baumeister-Leiva-Leon-Sims Weekly Economic Conditions Index for US (green), for Wisconsin (pink), all y/y growth rate in % deviation from trend. Source: WECI, accessed 12/21, and author’s calculations.

I’ve been using 2% for the national trend; for Wisconsin, pre-pandemic trend was about 1.5%. Taken literally, this would imply Wisconsin is currently growing at about 2.5%.

17 thoughts on “The Wisconsin Macro Outlook (Updated for Employment Release)”

  1. pgl

    If Moses and the rest of the gang need holiday shopping advice – please do not buy My Pillows products:

    Mike Lindell’s Products Are Getting Terrible Reviews

    https://www.msn.com/en-us/money/companies/mike-lindell-s-products-are-getting-terrible-reviews/ar-AA1lR5Dx?ocid=msedgdhp&pc=U531&cvid=a126f3f4d4734dd79bd95e1203c6f813&ei=11

    Mike Lindell’s products are getting terrible reviews online. The businessman and ally of former President Donald Trump is the founder and CEO of MyPillow, which sells bedding, towels, clothing and footwear. The company enjoys broadly positive reviews on its own website, with one review describing men’s slip-ons as “fantastic” and another describing men’s moccasins as “very comfortable and durable.”

    But reviews on the website Trustpilot tell a different story, with people recently posting complaints about the quality of MyPillow products including slippers. One review posted earlier this month said: “Your slippers started falling apart after just a couple of months. The rubber is brittle and the quality is crap. I would not recommend these slippers to anyone.” Another review from November said: “My husband purchased my slippers at Christmas 2022. Paid alot [sic] of money, less than one year later the rubber around the slipper is cracking and falling off. They are a very soft slipper, but the rubber is really bad. I would love to submit photos but I don’t know where.” Meanwhile, a third described a pillow as a “lumpy bumpy cheap pillow.”

    1. Moses Herzog

      I like to poke at people who do dumb things sometimes. “Take the bait” by those folks in marketing. 95% they don’t fool me. But maybe 3%–5% I make a dumb move. My father has always had a distant affection for Amish and their way of life (he knew there were some “hidden in the dark” negatives about Amish, but still held some affection and admiration for their way of life. And when my father got older he had heart problems, and his blood circulation was a little wanting, and he would get cold. The house thermometer could be at 74 degrees Fahrenheit and you could feel my Dad’s skin and you would guess the house temperature would be at 60 degrees based on the coldness of his skin. So I wanted to solve this problem where the house feeling hot and my Dad freezing to death. So they had a magazine advert (It may have been Parade magazine, or something of that flavor) for an “Amish made” space heater. I think it also ran on TV. And somehow, my mind became super-focused on the word “Amish-made” like it was magical. Just super-focused on the word like I had Asperger’s and somehow there would be no problems with this product because it was “Amish made”. And my father’s mind was not what it used to be (he would have seen through the whole farce when he was younger, because my Dad was way sharper than me when he was younger). And I talked him into getting this “Amish made” space heater he could put by his lounge chair. It was a crap product, same as “My Pillow”. And to this very day, when I think about it, it makes me grimace and feel shame I ever talked him into buying that piece of crap. One of my more absentee moments.

  2. Moses Herzog

    Political news in a state bordering Wisconsin:
    https://www.detroitnews.com/story/news/politics/2023/12/21/donald-trump-recorded-pressuring-wayne-canvassers-not-to-certify-2020-vote-michigan/72004514007/

    Press the white play button after the link jump:
    https://www.cnn.com/videos/politics/2023/12/22/detroit-news-donald-trump-audio-ebof-intv-vpx.cnn

    People vote for the orange abomination once more we can say goodbye to Democracy or any thing resembling freedom in this country, And I also think it’s going to encourage public disobedience, and violence.

  4. Moses Herzog

    This is over a week old but it seems to be getting some attention. Obviously, not all of it good:
    https://www.newyorker.com/news/the-weekend-essay/in-the-shadow-of-the-holocaust

    This is the problem with Israelis. They say they’re against genocide. But it seems for many Israelis, there’s only one version of genocide that actually bothers them. They still like to play friendly with Russia. It doesn’t speak highly of them. Picking if and when genocide truly upsets them.

    1. Macroduck

      Chris Bertram captures the essense of the problem:

      https://crookedtimber.org/2023/12/18/i-cant-write-about-gaza/

      An elaborate rhetorical trap has been set for anyone who argues for the value of Palestinian lives: What about Hamas? What about history? What about Israel’s democracy? How dare you mentioned the value of Palestinian lives without reciting the history of Jewish suffering?

      Just like you can’t say “Black lives matter” without someone taking offense, you can’t say Palestinian lives matter. Read Bertram – he wrote it better.

      1. Moses Herzog

        Sometimes you don’t need to write a graduate paper length essay to say something very impactful. It was succinct but made the point in a forthright way.

      2. pgl

        I’m visiting my daughter who always takes up the cause of the most down trodden and her big concern right now is how the Palestinians in Gaza are suffering. She’s right to do so even as she admits my former girlfriend – who served in the IDF – is a wonderful person. So I have not said much so far even though I should. I will only say the citizens are both side are deserving of leaders who strive for peace and they are being horribly led by the current political on both side.

      3. Ivan

        It is a huge problem that many Israeli and even jews outside of Israel are suffering an existential panic because of the history of genocide against them. Rational thoughts are killed by panic – and so are rational solutions. At the same time the leaders of Israel are either politically inept of amoral. We all know that for every terrorist killed in Gaza two new ones are created by the brutal slaughter of civilians. They are heading for a much worse problem and an indefinite state of emergency/war. I guess that will keep Netanyahu out of jail.

  5. Macroduck

    Oh, by the way, personal income data for November were released today. Real disposable income was up 4.25%, y/y in November, one month ahead of year end. The last time real disposable income was up that much for a full calendar year was in 2000, 23 years ago. So that must mean we’re stagnant, right? Please, feel bad. Really bad. Johnny says so.

    https://fred.stlouisfed.org/graph/?g=1d4zi

  7. pgl

    Kevin Drum on the issue of noncompetes:

    New York governor foolishly allows noncompetes to continue

    https://jabberwocking.com/new-york-governor-foolishly-allows-noncompetes-to-continue/

    New York will not be joining California as a state that bans noncompete agreements in employment contracts … Long story short, it’s been the law in California for 151 years with no perceptible problem. Quite the contrary: California’s big industries—tech, Hollywood, aerospace, farming—have thrived. They are among the most dynamic and profitable in the country. So jump in, the water’s fine. How many years of evidence do you need?

    1. Macroduck

      Non-competes are almost certainly unconstitutional except for those who carry proprietary knowledge in their heads. The widespread use of non-compete contracts only works because the cost of going to the Supreme Court is so high.

      This is an ethical problem, as well as a legal one. Business managers know that they can skirt the Constitution, so they do.

  8. pgl

    Did Bruce Hall pays $16 for this Big Mac meal?

    ‘Most Big Macs aren’t that expensive’: A $16 McDonald’s meal went viral as an example of runaway inflation

    https://www.msn.com/en-us/money/companies/most-big-macs-aren-t-that-expensive-a-16-mcdonald-s-meal-went-viral-as-an-example-of-runaway-inflation-but-the-white-house-disagrees-is-the-cost-of-living-crisis-real-or-exaggerated/ar-AA1lWnPp?ocid=msedgntp&cvid=9ef6bbea2f0a4fada7983ad43fda37ee&ei=21

    “The average Big Mac nationally as of this summer cost $5.58, up from $4.89 — or roughly 70 cents — before Biden took office,” the Post article says.

    OK – this price rose by 14% over a period of almost 3 years. Only a liar like Bruce Hall would claim this means the inflation rate was double digits.

Comments are closed.