Wisconsin’s Ranking for Future Economic Growth Jumps, But Predicted Growth Still Lags the National Average
Wisconsin’s ranking jumped up several spots on an index designed to predict states’ future economic growth. However, that index predicted Wisconsin’s growth would still lag the national average.
Every month, the Federal Reserve Bank of Philadelphia issues a report that relies on several economic indicators to give a picture of how each state’s economy is likely to fare in the next several months. Wisconsin has been faring relatively poorly in this index, which is constructed using employment and wage figures, the unemployment rate, construction levels, and other indicators. As this Milwaukee Journal Sentinel article noted about this index, “From March 2012 through this past April, Wisconsin has been stuck in the bottom half of the states, and usually has ranked 37th or lower.”
In the most recent report, Wisconsin’s economic outlook ranking jumped to 20th among the states. Wisconsin’s ranking garnered some attention – including this press release from the Governor – because our ranking was much improved over the previous month, when Wisconsin ranked 40th for predicted economic growth.
It’s good to see a sign that Wisconsin’s economy may be finally gaining some traction. But there are a few reasons why we shouldn’t break out the champagne just yet:
- The index uses the most current jobs figures, which are based on small sample sizes, so it is prone to the sort of sampling error that the Walker Administration has pointed out. The index combines several different measures, which should help smooth out some of the volatility, but it would be most helpful to focus on Wisconsin’s ranking over a longer period of time, rather than just one month. We would need a few months of consistently favorable outlook reports before we could conclude that Wisconsin’s economy has regained its footing.
- The index still shows Wisconsin’s predicted growth lagging the nation, as it has in all but two of the last 27 months. The chart below shows the economic index figure, which plunged into negative numbers for Wisconsin for a brief period this spring, and has since recovered to its previous levels.
It’s good that Wisconsin no longer ranks worse than all but a few states in terms of the outlook for economic growth. Optimism about this improved ranking should be tempered by the fact that our improved ranking could yet turn out to be a flash in the pan, and that Wisconsin’s outlook is still worse than the national average.