Not within the next couple of years, according the Walker Administration’s Wisconsin Economic Outlook, released today.
Figure 1 depicts the latest data on private employment, along with the Economic Outlook forecast and the path implied by Governor Walker’s promise to create 250,000 new private sector jobs by the end of his first term (black line). Note that data through 2014M09 reflects incorporation of Quarterly Census of Employment and Wages data, which the Walker Administration used to tout as the most accurate depiction of the labor market. Data thereafter reflect survey data, based upon levels reported in the QCEW data through 2014M09.
Figure 1: Wisconsin private nonfarm payroll employment (blue), Wisconsin Economic Outlook (May 2015) forecast (red), and the path promised by Governor Walker to achieve 250,000 by the end of his first term (black), set constant after 2015M01. Source: BLS (March release), Wisconsin Economic Outlook (May 2015), and author’s calculations.
Since the forecast horizon only extends through 2017, one cannot infer when the Administration believes the +250K target will be achieved.
In order to gain some additional insight on this question, I have estimated an ARIMA(1,1,2) on log private nonfarm employment over the available sample pertaining to Governor Walker (2011M01-2015M03). Such a specification accounts for 33 percent of the variation in the first log difference of monthly employment. Using this equation, I forecasted out employment. The forecast, and the accompanying ± 2 standard error band is shown in Figure 2.
Figure 2: Wisconsin log private nonfarm payroll employment (blue), ARIMA(1,1,2) forecast (red) and accompanying ± 2 standard error bands (gray), and the path promised by Governor Walker to achieve 250,000 by the end of his first term (black), set constant after 2015M01. Source: BLS (March release), and author’s calculations.
The forecast, which is slightly more optimistic than the Wisconsin Economic Outlook‘s, indicates that the +250K target will be achieved by 2018M06. Of course, given model uncertainty, the date could be as early as 2017M10, or as late as 2019M02.
An additional caution: I have used the data up to 2015M03 to estimate the ARIMA; as I noted previously, the QCEW data used in the January benchmark revisions drove a big downward revision in the survey-based data up to 2014M09. Should the same occur in next January’s benchmark revision, then holding all else constant, the forecasts I have plotted in Figure 2 will be overly optimistic.
More on Wisconsin’s lagging performance relative to the Nation, here and here.
Since tax revenues have failed to surge as the Republicans had hoped, it is likely further spending cuts will be implemented. As I have observed in the past, spending cuts are likely to be contractionary in the short run, making it even less likely that employment will continue to grow rapidly. On the budget situation, Marley and Stein of the Milwaukee Journal Sentinel write:
Only one year ago, the state was looking at a $1 billion budget surplus. Republicans used that surplus to add to a series of property and income tax cuts that they have passed since 2011 and are now considering the cuts to state programs to keep the budget balanced.
Overall, the state is left where budget watchers had long expected: in a challenging spot that is worse than the 2013-’15 budget but not as bad as Walker’s first budget in 2011. The difference is that Wisconsin now is having to cut key parts of the state budget amid a slow economic expansion, rather than four years ago when the state was doing so as it came out of a deep recession.
Maybe, their goal all along was to shrink government, while lowering taxes and, perhaps, planting seeds for future prosperity, 10 or 20 years down the road.
After all, they’re politicians. And, do we believe everything they say?
When will Menzie stop acting like a petulant child? This used to be a good blog, but now we have the occasional serious posts from Hamilton and endless temper tantrum posts from Chinn. This used to be a good blog: I suggest getting a new co-blogger!
my suggestion is either stop reading or stop posting here
IUsedToLikeThisBlog: First, thanks for finally figuring out how to spell my name correctly!
Second, you are right! I have to stop posting on the (1) the employment situation, (2) trade and GDP release, and (3) capital account openness (those are the previous three posts, if you are wondering), and other temper-tantrum related issues!
When will Wisconsin Democrats end their Fascist harassment of conservatives? I imagine we will see 250,00 jobs before that.
On a related issue, when will Wisconsin Democrats be indicted for violating court orders and Fascist raids on the homes of conservatives?
Menzie: Whenever the target is reached, it will still probably be before Obama’s promise of 1M new manufacturing jobs is reached. Just wondering why we don’t get regular updates on that front? Could it be that (gasp!) your opinions on which campaign promises are important and which are irrelevant are dictated by which side of the aisle they come from? While we’re at it, care to double down on your claim that it is “entirely plausible” to hit the 1M target?
Seriously, Menzie, stop it. No one is interested in your politics.
Anon: I was going to hold off on additional Wisconsin macroeconomy posts, but your admonition has convinced me to do more, not less. Wait for Thursday. Thank you!
Of course most of this was all set out, in detail, long ago, if, that is, you read Dr. Chinn’s blog since the recession. To those mathematically and statistically inclined the Walker Failure was pre-ordained: relentless vindictive budget cuts which only served to weaken in-state demand; foolishly misdirected attacks on government employees throughout the state which caused lower- and middle-income households (almost everyone knows someone working in government) to save money rather than spend it; wildly profligate tax cuts which only put huge amounts of money in the pockets of those who, if they spent it at all, spent it in Florida, Hawai’i, New York, California and Europe, or purchased luxury consumables from out-of-state. The pathetically weak Walker Failed Recovery result was pretty easy to predict: a sub-par recovery in jobs which dramatically lagged all other comparable states; a concentration of new jobs in Dane County (75% of all new Wisconsin jobs are in Dane County) and for the non-Dane county jobs that were created were almost all low wage below $12.00/hour (please the analysis at the UW-Milwaukee Economic Development Center). The highest paying job growth–nurses (for our growing elderly population). Demographically, this has led to the young leaving Wisconsin in record numbers with almost 60 Wisconsin counties losing population or barely sustaining themselves while the average age of those counties ominously shifts upward. After another ten years of GOP domination of the state, I suspect that most counties will have dropped about 7% in total population and that some northern counties average inhabitant age will be pushing 60 years of age. That will be perfect for political control, but I suspect that the state will hit the list of disregarded political entities being primarily a get-away destination for the affluent of Chicago and the Twin CIties.