THE Wisconsin Economic Outlook Forecast in February just came out yesterday. The same was true of the January 2023 estimates for employment in Wisconsin (incorporating annual benchmark revisions). What does the outlook look like, given the data revisions? Fairly good in the short term. Over the next year – reflecting the forecast for the Nation – not as pleasant, with a modest decline in employment.
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 of November 2022 (light beige squares), all in thousands, its BLS, DWD, Wisconsin Economic Outlook Forecast (February 2023, November 2022).
The upward revision to Wisconsin’s employment forecast is almost certainly primarily associated with the upward revision to the national employment level forecast.
In contrast, the GDP forecast level has been lowered, although the outline is no longer for a noticeable slowdown (mirroring the S&P Global forecast at the national level).
Figure 2: Wisconsin GDP (blue), DoR WI economic outlook forecast from February 2023 (light blue squares), from November 2022 (light beige squares), all in bn.Ch.2012$ SAAR. Source: BEA, DWD, Wisconsin Economic Outlook Forecast (February 2023, November 2022).
The economic outlook forecasts do not provide details on q/q movements in real GDP. I use the relationship of first log differences from Q1 2021 to Q3 2022 between US GDP and WI GDP to project WI GDP, assuming the S&P Global Market Intelligence forecast is 3/8. (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), DoR WI Economic Outlook February 2023 forecast (sky blue squares), and implied forecast using S&P Global forecasts (pink) , all in logs 2021Q4=0. Source: BEA, S&P Global Market Intelligence (08/03/2023), Wisconsin Economic Outlook Forecast (February 2023).