Wisconsin Gets Another Low Ranking for Economic Performance from the Philly Fed
Wednesday, May 23, 2012 at 2:36 AM by Tamarine Cornelius
The Federal Reserve Bank of Philadelphia tracks economic indicators for each state on a monthly basis and prepares a map comparing the states’ economic trends over the last three months. Wisconsin is doing a little better than it was late last year, when it had the lowest ranking, but our state only moved up to 40th for its economic performance over the period February through April.
If we use December 2010 as our baseline for analysis, the newly released data indicate that only one other state (Alaska) has experienced slower growth than Wisconsin. See the Budget Project’s new two-page paper for several charts analyzing the “Philly Fed’s” data and comparing Wisconsin to the national average and the growth in neighboring states.
The ratings are based on a measure the Philly Fed developed called the Coincident Index, which combines four state-level indicators: non-farm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements. The index for Wisconsin improved by 0.6 percent over the past three months, whereas the national average grew by 0.82 percent.
The Governor highlighted the Philly Fed’s findings two months ago, based on Wisconsin’s improvement in a forward-looking index. That data didn’t actually make Wisconsin look good, but we were recovering slowly from such depressed numbers that the the Governor’s office was able to make the claim that we had one of the larger improvements. (You can find the most recent report on the “leading index” here.)
As I have noted before, I think politicians (including governors, presidents and legislators) get too much credit or blame for economic trends. That said, the Philly Fed’s index has a big advantage over other measures that are being thrown around. Since job gains and losses are driven by regional, national and international trends, it doesn’t tell us much to say that a state has gained 20,000 jobs or lost 20,000 jobs. Rather than looking at economic indicators in isolation from the rest of the nation or region, it makes far more sense to compare a state’s economic trends with those elsewhere.
The coincident index provides an impartial way of comparing how states’ economies have been performing. Unfortunately, it doesn’t paint a pretty picture of how Wisconsin has done over the past year. Take a look at the three charts on page 2 of our new report.
As that report notes, we need to move past arguing about data sources. If we can reach a consensus that Wisconsin’s economy can and should be doing considerably better, perhaps then we can have a rational debate about what sorts of public sector investments can pave the way for much more robust job and income gains for Wisconsinites in the years ahead.