Wisconsin's income and growth ended 2023 strong, but was weak earlier in the year

Saw this post from UW-Madison Professor Menzie Chinn on Wisconsin's economy at Econbrowser. It includes this graphic that sets the baseline in late 2021, and adjusts the state's wages/salaries and GDP for inflation.

It's quite a remarkable difference between GDP and the coincident indexes (both of which are measures of the overall economy). The GDP figures indicate the state was in recession for most of 2022 and part of 2023, but the coincident indexes show solid and steady growth in the state. So what's right?

I'd trust the coincident indexes, as the jobs numbers also have continued to rise (the NFP numbers), and we saw consistent wage and salary growth above inflation for all of 2023. But you can also see things level off in early-mid 2022 with the spike in inflation, indicating that there was an effect where people weren't necessarily losing jobs, but their wages weren't keeping up with the 10-12% annual rate of price hikes during the first half of that year.

But as inflation has faded, wages and jobs have kept on growing in Wisconsin, and we are generally better off than we were at the end of 2021. And Professor Chinn added the final numbers after last week's state GDP and income report from the Bureau of Economic Analysis. As the GDP figures indicate, growth in that category came back in the second half of 2023 in Wisconsin, and the state actually ended up tied with Indiana for the best GDP growth in the Midwest in the last 3 months of the year, at 4.3%.

But you can also see from the chart at the top of the post that Wisconsin's GDP (allegedly) fell in the first part of 2023, and it means that the state's annual-level GDP only went up by 0.2% for last year. Not great on the 12-month time frame, but pretty good in the last 6 months, creating momentum going into this year.

Unlike GDP, Wisconsin’s overall income grew in every quarter of 2023, and was pretty consistent throughout the year.

The finishing quarter's income growth of 4.2% was 2nd best in the Midwest, and in the top 20 for America.

And even better within that income stat, Wisconsin had the strongest growth in earnings in our part of the country over the last 3 months of 2023.

Change in net earnings, Midwest Q4 2023
Wis. +5.0%
Ohio +4.5%
Ind. +4.5%
Mich +4.4%
Minn +3.6%
Ill. +3.4%
Iowa -0.1%

But on an annual basis for growth in earnings, we are not as impressive - smack-dab in the middle of the Midwest at 4.6%. We also lagged the US rate of 5.6% for earnings growth. Likewise, our annual income growth of 4.4% falls behind the U.S. rate of 5.2%, which leaves us at 41st in the nation (although we are also penalized due to Wisconsin's lower population growth vs the rest of the US).

So to sum things up using these numbers, it appears that a slow first half of 2023 in the Wisconsin economy picked up steam in the second half of the year. I also noted that recent revisions placed Wisconsin job growth as lower in early 2023 compared to better numbers later in the year. So while we continued to have a slower-but-still growing economy and jobs market last year, the ending kick seems could be something that can build upon itself for the start of 2024.