Saturday, February 6, 2016

Wisconsin economic failures get some more national attention

Last week, the Federal Reserve Bank of Philadelphia released their monthly coincident index report, which is an approximation of each state’s economic performance over the last 3 months. And Wisconsin did not do well.

That report earned Wisconsin and other states in pink and red some national notice in Friday’s Washington Post Wonkblog, in an article titled “The seven states that are doing much worse than the rest.”
The main reason is historically low oil prices. The price of a barrel of Brent crude has fallen from over $100 in mid-2015 to less than $35 today. That is weighing on the economies of North Dakota, Wyoming, Alaska, Mississippi and Louisiana, which have extensive energy reserves and/or oil and gas refining facilities.

In Wisconsin and Illinois, fiscal issues and the sluggish performance of some manufacturing industries was likely to blame.

In total, 41 states saw their economies grow. The states with the strongest growth -- over 1 percent in the three-month period, according to the estimates -- include Oregon, Idaho, Arizona, Colorado, Kansas, Georgia, West Virginia, New Jersey and Maine. Michigan and Oklahoma weren't fairing too well either at the end of 2015 -- the Philadelphia Fed's data shows that their economic growth was unchanged from three months before.
And that's not just a recent trend. Using those updated figures, we see that Wisconsin has the worst economy in the Midwest since Scott Walker took office at the start of 2011. And notice the flattening in both here and Illinois in the last half of 2015

UW’s Menzie Chinn also talked about the coincident index with this post on Econbrowser, noting how ALEC states like Wisconsin and Kansas have failed to keep up with the growth in the rest of the country.

Yet here’s Gov Walker this week, trying to spin to the Portage Area Chamber of Commerce that things are just swell in Wisconsin (and using taxpayer dollars as part of this propaganda tour, no less).
Walker told the gathering he had good news to share, that unemployment in Wisconsin is the lowest it has been since 2001.

According to the Bureau of Labor Statistics, Wisconsin’s unemployment rate has been tracking downward through the second half of 2015, from 4.6 percent to 4.3 percent. This beats the national average that went from 5.3 percent to 5 percent over the same time. Walker said the state’s fiscal situation is far healthier than that of Illinois, which is running an unemployment rate almost a full percent above the national average.
First of all, anyone who has to reach for the train wreck in Illinois to make yourself look better already seems desperate. But second of all, Wisconsin has almost always had lower unemployment than the rest of the country for the last 30 years, and being 0.6% below the national rate (as it stands today) is underperforming that history, if anything. In addition, it’s well-documented that Wisconsin’s drop in unemployment in the last year had more to do with people leaving the labor force than it had with people finding a large amount of jobs.

And how can Walker talk up Wisconsin’s fiscal health when even leaders in his own party are admitting that the state budget is messed up and in serious trouble? What’s doubly interesting is how those WisGOPs try to blame a “slowing national economy” for the budget troubles, which implies that the national economy was going pretty darn well before the last few months. All that's missing is the "THANKS OBAMA!"

So if the U.S. economy is slowing from the solid growth it previously had (likely a true statement, by the way) why didn’t Wisconsin’s budget become more stable while the good times were going on? And why wasn’t Act 10 the budget cure-all that it was sold as 5 years ago? And why does our economic growth continue to lag the rest of our neighbors in the Midwest? HMMMMMM???

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