August 2024 Wisconsin Economic Outlook Forecast

Released yesterday:

Based upon the S&P Global national forecast, DoR concludes:

• Wisconsin employment is expected to grow by 0.8% in 2024. Wisconsin’s unemployment rate was 3.0% in the second quarter of 2024, a full percentage point below the US rate of 4.0%. The forecast expects Wisconsin’s unemployment rate to peak at 3.6% in 2027, compared to 4.6% nationwide.
• Wisconsin’s personal income increased 4.4% in 2023 and just 0.6% after adjusting by inflation. Nominal wages grew a strong 5.7%, offsetting a decline of 2.4% in proprietors’
  income. The forecast anticipates nominal personal income to grow 4.3% in 2024. Real personal income is expected to increase 1.7% in 2024 as inflation slows.

For employment:

Figure 1: Wisconsin nonfarm payroll employment (bold black), forecast based on US NFP (red), and Department of Revenue May 2024 forecast (light tan lines), August 2024 forecast (blue lines), all in 000’s, s.a. Forecast based on first log differenced Wisconsin and US employment, 2021M07-2024M06, dynamically forecasted. Vertical axis is on log scale. Source: BLS, DoR, and author’s calculations.

As for GDP:

Figure 2: Wisconsin GDP (bold black), and Department of Revenue August 2024 forecast (blue line), nowcast based on 2021Q3-2023Q4 in first log differences (red), +/- 1 standard errors (gray lines), all in bn.Ch2017$ SAAR. Vertical axis is on log scale. Source: BEA, DoR, and author’s calculations.

One mystery is why BEA’s estimates of Wisconsin GDP is seemingly detached from income measures (total salaries and wages, employment, Philadelphia Fed’s coincident index). It might come about because national level — as opposed to state level — industry specific price deflators are used, but that’s mere speculation on my part. The adjusted R² between quarterly growth rates over the 2021Q3-2023Q4 is 0.70. The forecasted level is shown in red. Given sampling uncertainty, it’s possible to hit the DoR forecast.

More on the Wisconsin economy from Michael Collins (LaFollette) on WPR, Associate Director Laura Dresser on WIsconsin PBS (8/30).