Wisconsin Economic Outlook, Revised Wisconsin Employment and GDP Benchmark

February Wisconsin Economic Outlook just released yesterday. The same was true for Wisconsin employment estimates for January 2023 (including annual benchmark revisions). What does the forecast look like taking into account the revision of the data? Not bad in the short term. Over the next year – reflecting the outlook for the nation – not so well, with a modest decline in employment projected.

Picture 1: Wisconsin Nonfarm Employment as of January 2023 (blue), as of December 2022 (yellow-brown), DoR WI Economic Outlook for February 2023 (sky blue squares), as of November 2022 (light brown squares), all in the 000s, borehole Source: BLS, DWD, Wisconsin Economic Outlook (February 2023, November 2022).

The increase in Wisconsin’s employment outlook is almost certainly largely due to the increase in the national employment outlook.

In contrast, the level of the GDP forecast has been shifted down, although the contours no longer foresee a marked downturn (reflecting S&P Global’s forecast at the national level).

Figure 2: Wisconsin GDP (blue), DoR WI Economic Outlook since February 2023 (light blue squares), since November 2022 (light brown squares), all in CAD billions 2012 SAAR. Source: BEA, DWD, Wisconsin Economic Outlook (February 2023, November 2022).

The Economic Outlook does not provide details on the movement of real GDP on a quarterly basis. I use the ratio of the first log difference 2021Q1-2022Q3 between US GDP and Wisconsin GDP to forecast Wisconsin GDP based on the S&P Global Market Intelligence 3/8 Forecast. (A one percentage point change in US GDP is associated with a 0.85 percentage point change in Wisconsin GDP, with an adjusted R2 of 0.78, DW = 1.28.)

Figure 3: US GDP (black), S&P Global Market Intelligence 3/8 forecast (chartreuse), Wisconsin GDP (blue), February 2023 DoR WI Economic Outlook (sky blue squares) and implied forecast using S&P Global forecast (pink). everything in the logs 2021Q4=0. Source: BEA, S&P Global Market Intelligence (03/08/2023), Wisconsin Economic Outlook (February 2023).