The February Wisconsin Economic Outlook forecast was just released yesterday. So too were January 2023 estimates for Wisconsin employment (incorporating annual benchmark revisions). How does the outlook look, given the data revisions? Pretty good in the short term. Over the next year – reflecting the forecast for the Nation – not as nice, with employment projected to decline modestly.
Figure 1: Wisconsin nonfarm payroll employment from January 2023 release (blue), from December 2022 release (tan), DoR WI Economic Outlook forecast from February 2023 (sky blue squares), from November 2022 (light tan squares), all in 000’s, s.a. Source: BLS, DWD, Wisconsin Economic Outlook forecast (Feb 2023, Nov 2022).
The upward revision in the WIsconsin employment forecast is almost certainly mostly associated with the upward revision in the national forecast in employment level.
In contrast, the GDP forecast level has been moved down, even though contour is now no longer for a noticeable downturn (mirroring the S&P Global forecast at the national level).
Figure 2: Wisconsin GDP (blue), DoR WI Economic Outlook forecast from February 2023 (sky blue squares), from November 2022 (light tan squares), all in bn.Ch.2012$ SAAR. Source: BEA, DWD, Wisconsin Economic Outlook forecast (Feb 2023, Nov 2022).
The Economic Outlook forecast does not provide detail regarding q/q movements in real GDP. I use the 2021Q1-2022Q3 first log differences releationship between US GDP and WI GDP to project out WI GDP, assuming the S&P Global Market Intelligence forecast of 3/8. (A one percentage point change in US GDP is associated with a 0.85 percentage point change in Wisconsin GDP, with adjusted R2 of 0.78, DW=1.28.)
Figure 3: US GDP (black), S&P Global Market Intelligence forecast of 3/8 (chartreuse), Wisconsin GDP (blue), DoR WI Economic Outlook forecast from February 2023 (sky blue squares), and implied forecast using S&P Global forecast (pink), all in logs 2021Q4=0. Source: BEA, S&P Global Market Intelligence (3/8/2023), Wisconsin Economic Outlook forecast (Feb 2023).
Off topic, my current obsession –
It llooks ike Silicon Valley Bank was operating in some ways like an investment bank. That’s not surprising, given it’s specialized business. Venture capitalists required that firms in which they invested hold all the money from the VC at SVB because SVB gave VCs information on the accounts. Something like 87% of deposits were over the FDIC insure limit, with the average deposit size around $4 million.
Investment banks were the canaries in the mortgage mine back in 2008. This is in a way good news (for now), because VC-to-tech startup and crypto-currency banking are not nearly as widespread as mortgage banking was in the mid-2000s. Also good news, large-denomination time deposits are an historically small share of total commercial bank deposits:
https://fred.stlouisfed.org/graph/?g=112IC
“Large” is $100,000 and up, so not the insured limit. Small and medium-sized businesses have a hard time remaining under the insured limit, but that’s almost beside the point. Runs are unlikely when most deposits are insured, and the low share of “large” deposits means most are insured.
A somewhat different issue – banks would be less subject to things like moral hazard if they maintained more than 10% of their assets in the form of equity. I lot of smart people would make the minimum capital ratio closer to 20% rather than 10%. Even Greenspan advocated that even though his oped bungled basic ratio definition, which John Cochrane had fun with.
Then again Cochrane was running around advocating that banks issue only equity money. Yea – he does say some insane things for someone who advertising himself as a financial economist.
https://johnhcochrane.blogspot.com/2015/08/greenspan-for-capital.html#more
I had to look for this. What Greenspan got wrong had to do with the Modigliani-Miller proposition. Then again a lot of banking types get this wrong.
Could this be another side effect from Trump deregulation?
https://econbrowser.com/archives/2023/03/wisconsin-economic-outlook-benchmark-revised-wisconsin-employment-and-gdp#comments
Amid the collapse of Silicon Valley Bank (SVB), some commentators have claimed a Trump-era rollback of financial regulations may have contributed to the situation…. In the fallout of Friday’s run on the bank, some reports noted that a rollback of banking regulations by former President Donald Trump might have weakened SVB’s ability to manage risks associated with interest rates. In 2018, according to The New York Times, Trump signed a bill that axed regulatory requirements for regional banks with less than $250 billion in assets. Under the new rules, such institutions no longer had to submit to “stress testing” by the Federal Reserve and were no longer required to keep a certain amount of cash on hand to protect against the effects of financial shocks, the newspaper reported. The Times noted in its report that the bill was championed by SVB CEO Greg Becker. Becker had pressed lawmakers in Congress to lessen regulation that placed higher scrutiny on certain banks, claiming that SVB had a “low risk profile of our activities and business model.” By 2018, his bank had spent roughly $500,000 to lobby for the changes that Trump ultimately signed into law, according to The Lever, an investigative news outlet.
Oh no – the low wages on SNL for its post production editors may lead it to shut down:
https://www.msn.com/en-us/tv/news/saturday-night-live-about-to-shut-down/ar-AA18vlBQ?ocid=msedgdhp&pc=U531&cvid=944625e5027f4affbfc064833cd67f70&ei=20
We know little about the Saturday Night Live post-production editing team except that it comprises 12-20 people. The crux of their claims (and the reason behind the potential strike) is that this team is paid far below the industry standard for their work. And this isn’t standard across the board: while their colleagues make pay consistent with industry standards, the post-production editors only receive a fraction of the wages they should be paid. Behind the scenes, these Saturday Night Live editors have been engaged in negotiations with NBC, but it appears these negotiations are going as well as Aubrey Plaza’s audition. While the network has proposed raising wages, their new wages are still far short of what these post-production editors could make by working on a union show. This is largely due to how the costs of living have increased so much that the increased wages proposed by NBC would be insufficient. Also at stake is the health coverage received by these Saturday Night Live post-production editors. The network has proposed a two-tiered health benefits package that would effectively provide inferior coverage to future hires as well as a “management right’s” clause that would let executives change rules and policies in the workplace and subcontract out work (a handy way to get around future issues with employees). Needless to say, the post-production editors don’t agree with these proposals, nor do they agree with the insufficient wage increase offered, so it looks like a strike may go into effect in early April that may indefinitely shut Saturday Night Live down.
I try to support the unions as much as I can. I get union made bread, union made donuts. I get “Miller High Life” beer even though it doesn’t taste that great, because it’s union made out of Milwaukee. Union made chocolate. I just found out recently we have 3 union member Starbucks in our metro area, so I’m trying to figure out how to visit one without burning a semi tanker worth of gas. I think one of them is not terribly far from where I get my groceries so I will try to navigate that one out on google maps before I go. I do what I can to support unions. You do what you are able. I’m not really “a Starbucks guy”. From my viewpoint Starbucks is mostly a snobbery thing and in reality a singles meet-up thing. I grew up surrounded by suburbia snobs and I’ve had my belly full of shallow people who just buy mediocre coffee for $30 just to get off on appearances. I’m more a Dunkin Donuts guy or maybe sometimes Panera. But I want to occasionally support the union member location Starbucks. I’ll tell you one thing, It tells you a lot about Lorne Michaels. He’s swimming in money by cherry pciking people with REAL talents and he doesn’t give a shit about the Editors?? Tells you all you need to know about the character/ethics of Lorne Michaels. i.e. Michaels has no morality/ethics.