The Wisconsin Economic Outlook: July 2013

Key numbers: 79 thousands and 81 thousands

Those are the figures for the shortfall for the 250,000 private jobs commitment made by Governor Walker as of June, and the shortfall predicted for January 2015 by the Wisconsin state government’s own forecast in the Wisconsin Economic Outlook, released today. Figure 1 below shows it all.


Figure 1: Private nonfarm payroll employment in Wisconsin, June release (blue), path of private nonfarm payroll employment promised by Governor Walker (red), and Wisconsin Economic Outlook forecast (green); quadratic match average of WIE forecast (gray-green). NBER defined recession dates shaded gray. Source: BLS, Wisconsin Economic Outlook (July 2013), NBER, and author’s calculations.

Note that the estimated shortfall for January 2015 assumes the 2015 forecast average prevails for January 2015. If one uses a smoothed (quadratic match) version of the annual averages, one finds the forecasted shortfall is 104 thousand.

From the report:

The Wisconsin economy continues to grow at a moderate pace. The forecast calls for growth in terms of jobs and income for 2013 with the economy gaining steam in 2014.

Wisconsin personal income grew 2.7% in 2012 and will increase 1.9% in 2013. Wisconsin personal income growth will then accelerate to 4.6% in 2014 and 4.4% in 2015 and 2016.

Employment in Wisconsin is expected to show positive growth throughout the forecast period, rising 1.1% in 2013, 1.4% in 2014, 1.9% in 2015, and 1.8% in 2016.

For comparative purposes, here is Wisconsin private employment growth compared against the nation’s, normalized to January 2011.


Figure 2: Log private nonfarm payroll employment in Wisconsin (blue), and in the United States (red), both normalized to 2011M01=0. Source: BLS, and author’s calculations.

For some additional discussion of trends in overall economic activity, see here. For some conjecture regarding lagging job creation, see here.

15 thoughts on “The Wisconsin Economic Outlook: July 2013

  1. jonathan

    My suggestion is you relabel the y-axis so it runs from 2640 at the bottom to 2280 at top. Problem solved.

  2. 2slugbaits

    Well, maybe climate change will help the Wisconsin economy by resurrecting the Dells and Lake Geneva as popular vacation places. Beer sales too.

  3. Anonymous

    Maybe if we just modeled Wisconsin after Detroit with strong unions, living wage jobs, and 40-60 years of Democrat rule we’d have a great society.

  4. John

    Dr Chinn,
    Would you be willing to flesh out your background so as to better understand your positions in your research and blog postings?
    Where were you born?
    Where were your parents born?
    Do your parents espouse your same political leanings?
    Do you intend to remain in Wisconsin after you retire?
    If not, where do you intend to move to?

  5. dilbert dogbert

    “Maybe if we just modeled Wisconsin after Detroit with strong unions, living wage jobs, and 40-60 years of Democrat rule we’d have a great society. ”
    When strong unions and Demodumb rule must be destroyed sometimes there is collateral damage – a city gets destroyed.

  6. Ricardo

    I know you receive a lot of pleasure from basking in Wisconsin’s struggling economy, but what do you think is going to happen to North Carolina since they cut taxes? Do you think if there was less resistence to policies that would bring Wisconsin’s recovery things might improve even faster?

  7. randomworker

    John – what a strange bunch of questions…almost like you are asking him if he is some kind of communist mole!
    Anyway, two clicks takes you here:
    One of the best educations our great nation offers. Remarkable accomplishments in the field of economics. Why on earth would you want to know the political leanings of his parents?

  8. Hal

    I find it strange that visitors to an academic blog- and an article that simply reports published data without any explicit conclusions/arguments- would have such visceral and irrelevant comments. I am quite surprised that such people would even follow blogs like this; I suggest you stick to Yahoo news comment boards. And so that you don’t attack me, this is coming from someone considered center-right leaning

  9. John

    Randomworker (& Hal)
    I started reading this blog when it just posted on by Dr. Hamilton. I enjoyed his style. He would offer nuanced arguments to a variety of economics topics. It was interesting to see his views on energy evolve. Yet, he would do so in a style that was nuanced and informative. He would present things in a way that were not politically charged. I still do not know for certain which way he leans politically, but would guess Democrat just by his profession (college professor). Yet, I can’t prove that from his writing.
    On the other hand, Dr. Chinn’s postings are increasingly politcally polemic in an in-your-face manner. Those of us who live in Wisconsin see right through many of his posts as being anything other than a logical, economic analysis of the situation at hand. It’s more in-your-face. There are many behind-the-scenes facts that are left out of his posts about wisconsin politics. I have yet to see him write a favorable post on anyone who advocates for either a tax freeze or, heaven-forbid, a tax cut. It’s always along the lines of Republican = bad.
    Why do I care? Well, let’s see. Dr. Chinn collects 2 salaries from the University of Wisconsin system in his current position. I don’t know the specifics, but I believe his position ties into the State of Wisconsin Pension System, which, unlike most states, is 100% funded. Now, as Dr. Chinn continues to advicate for more and more and more state taxes to continue to feed the state government beast (of which he profits handsomely), I am intensely curious if he intends to stay around post-retirement. I am willing to bet not. I would be shocked if he did not take his state pension payout (based upon two University salaries) and move to a much more favorable tax state, rather than take his retirement in Wisconsin and continue to pay the enormous taxes. He indirectly advocates for these continuous yearly tax hikes by attacking anyone who dare suggest goverment restraint. But for those of us who continue to live here and pay the taxes funding Dr. Chinn’s lifestyle, his posts are something other than purely ‘academic’.
    So, what I’m trying to figure out is where his posts are coming from. I suspect that he is arguing from a position of pure self-interest. More taxes = more raises = (eventually) more pension payouts that he can collect in another state with lower income tax rates.
    Yet, I cannot rule out the possibility that his parents grew up in some communist, repressive country, and influenced his politics in that way. But, probably not. He’s most likely couching his self-interest behind ‘academic’ posts.

  10. Menzie Chinn

    John: I collect two salaries from the State of Wisconsin? That’s news to me. Please tell me what the other one is, besides the one I get as a professor.

  11. Anonymous

    Whatever faults Menzie may or may not have, you have to admire his dedication to free speech on his blog posts. 90% of bloggers would delete such harsh, and probably uncalled for, ad hom attacks on him. I say this as someone who rarely agrees with him.

  12. Dr. Morbius

    Johnny is a little confused I think because of a possible back-up appointment. For those unfamiliar (or, like some posters, too lazy to find out) with a university appointment system, you can have multiple appointments. You do not, however, receive multiple pay checks. You can have an appointment as a professor and as a dean (administrative position) within a college. Your salary is split in some proportion between the two positions–but two paychecks? dream on, dear Johnny, dream on.
    Other than a multiple appointment, well, yes, as a condition of your appointment at the UW-Madison you commit, I believe 7% (or round about that) of your salary to the WETF, the WI State Pension Fund, and this is matched by a contribution of your employer, identical to that in the private industry where 401(k) contributions are matched. So this means two pay checks? In what dimension?
    More taxes = more raises? Well perhaps for the Governor’s political appointees. However, and correct me if I’m wrong, the 1% increase granted July 1st to the UW-System employees was the first general raise to that institution’s employees since 2007.
    The only other way of getting a raise generally was to receive a competing offer (which means responding to a faculty search, obtaining formal reference letters, interviews, etc.) and have the UW match the offer.
    This has been a wonderful system for universities in the South and other parts of the country to obtain highly skilled faculty from places like Madison; especially for hard to find people in the physical sciences, and and they certainly enjoy the influx of the grants that those faculty members bring to those institutions. So, it’s working, if by “working” you mean failure, and as Dylan said, “they’re ain’t no success like failure”.

  13. Ricardo

    Declare Detroit a Free City
    by Patrick Barron, the Graduate School of Banking at the University of Wisconsin, Madison, and Austrian economics at the University of Iowa, in Iowa City
    We who advocate the free market as the sure path to peace and prosperity often hear that the US economy has to get much, much worse before any real reforms will be allowed. Why must we continue to wait before taking serious action to throttle back parasitic government? A common response is that we need to wait until things are so bad that no one will be able to deny that government is the problem and not the answer. Then even died-in-the-wool socialists will give the free market a chance.
    Well, what if we hit the brink and people want more government and not less? The result would be fascism in the US. Given a choice, I for one prefer not to wait for such an eventuality. I would rather have an American test case to illustrate that radically less government leads to peace and prosperity.
    The decades’ growing tragedy of a now bankrupt Detroit provides a unique opportunity to test our fundamental principles. What if Detroit became a free city in which government provided for public safety, honest courts, protection of property rights, and little else? Might not unabated free enterprise take hold as it always has in America?
    Detroit is bankrupt, and its problems appear to be unsolvable. Its population peaked in 1950 at 1,850,000 only to fall to 706,000 in 2011, surely representative of people voting with their feet. As British politician Daniel Hannan has written, the Detroit disease may be well advanced in the rest of American cities and perhaps in all of America as well. Before the disease can kill the rest of America we have the opportunity to give free market reforms a chance in a fairly controlled setting — the bankrupt and dysfunctional city of Detroit.
    All that Detroit really needs is economic freedom and secure property rights. Give Detroit its freedom from all manner of government, including the federal government. Declare Detroit a free city. (You can rest assured, Detroit, that America will come to your rescue if those bloodthirsty Canadians attack!) In other words, no one would pay any federal taxes whatsoever or be subject to any federal regulations whatsoever. Wouldn’t it be nice not to pay federal taxes, not even Social Security and Medicare taxes? Do the same with Michigan taxes. No taxes BUT also no federal or state aid either.
    A Free Detroit would have absolutely no labor and workplace regulations, including minimum wages, mandatory insurance, equal opportunity rules, occupational safety rules, etc. People would be allowed to work together cooperatively for whatever terms their marginal productivity of labor will secure.
    End all red tape that thwarts business startups and hobbles its expansion, such as licensing, public health regulations and inspections, zoning restrictions, etc. Do not be concerned that people may be employed in low wage, dangerous jobs against their will. The reality is that business owners must recruit workers and not dragoon them and chain them to their workplaces. Nor are business owners interested in harming either their workers or their customers. If they do, normal civil and commercial law will suffice.
    Privatize all government services, such as garbage pickup, water and sewage services, and allow for unbridled competition in these and other areas, even fire protection. Sell off city property (who needs offices that are empty of government bureaucrats anyway?) and deed public housing to its current occupants, making them responsible for their own abodes. You may be surprised how responsible people can be with their own property. End public education and all its costs. Allow the people to get the kind of education that they desire, whatever that may be. Since half the current population of Detroit is functionally illiterate, what’s the risk?
    Do you want a safe society? Then let people arm themselves without any licensing requirements. Since it takes Detroit police approximately an hour to answer a typical 911 call, this is simply a practical solution to the basic human right of self-defense. Above all end welfare. The destructive cycle of dependency is driving American cities to the financial and cultural wall.
    Do not expect overnight success, but who knows? A free market always surprises us with new innovations. At first one can expect lots of mom and pop startups, sidewalk vendors, unlicensed and untaxed services such as simple property repair, home schools, private taxis, etc. But if Nike and other American businesses are enticed by lower costs and fewer regulatory burdens to outsource their manufacturing operations overseas, why would they not take a good look at a Free Detroit? Expect to be amazed.
    Allow Detroit to become a safe, cooperative city that represents the best that America can be. Economic freedom will ensure the rebirth of Detroit. This city can become the beacon of true prosperity to the rest of America and to the world.

  14. Ricardo

    What I find amazing is that everyone knows intuitively that Patrick Barron’s solution to the probem in Detroit would work almost instantly, but the politicians would never try it. The reason is obvious. Such a city would boom at the expense of the politicians lining their pockets; it would take away their checkbooks.

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