The impetus for this post comes from a recent blog at Econbrowser by UW Professor Menzie Chinn, who makes the following observation when talking about the recently released coincident indexes for all 50 states by the Federal Reserve Bank of Philadelphia. Wisconsin performs well in this survey over the last 6 months, but Prof. Chinn is skeptical.
As I have noted elsewhere, much of the surge in WI nonfarm payroll employment (a series used in the construction of the coincident index) occurs after September 2014, and hence after QCEW data availability. Much of the surge that was apparent starting in late 2013 was subsequently “benchmarked away” with the incorporation of QCEW (Quarterly Census on Employment and Wages) data; it may again be the case this time around. If that outcome is realized, then the Wisconsin coincident index will likely be revised downward (although we won’t know until nearly a year from now). For now, we know employment fell in Wisconsin [in March].So let's look at the numbers for Wisconsin, the rest of the Midwest, and the U.S. as a whole, and put Prof. Chinn's question to the test. We can take the last 6 months that have been benchmarked to the QCEW (and were a large part of the 30,000 jobs that were removed from Wisconsin's total a couple of months ago), and then compare it to what we've seen in the 6 months measured since, which have not been part of a QCEW report.
The chart for private sector job growth ends up looking like this.
Look at how Wisconsin (in red) jumps from last place and 0.52% growth during the benchmarked months, to 2nd in the Midwest at 1.47% in the non-benchmarked months. By comparison, the U.S. stayed steady in each of these 6-month time periods (1.30% first 6 months, 1.31% 2nd 6), as did Illinois and Ohio. Add that to the contrasting data we've seen in Wisconsin where new mass layoffs seem to be announced every other day, but unemployment claims stay low, and where we see huge job growth reported in the state over the last 6 months, but higher income tax revenues don't follow.
Maybe this is all legitimately happening, but this song keeps popping in my head with each new data release, especially if it comes from Scott Walker's Department of Workforce Development.