Sunday, May 17, 2015

U.S. and Wisconsin economy questions

So where is the U.S. economy going at this time? There have been some flashing yellow lights of caution in the last few weeks, including the 0.2% GDP number for the 1st Quarter, and a slight slowing in job growth over that same time (down to 186,000 a month after averaging well over 200,000 for 2014). In addition, numbers from late last week said that consumer confidence took a drop in April, even with lower gas prices supposedly buffering people's pocketbooks.

But on the flip side, much of the drop in job growth is explainable, and it relates to that drop in oil and gas prices. The mining industry (which includes oil extraction, fracking, and related areas) gained more than 41,000 jobs in 2014, but has lost 48,700 in 2015. If you take out that industry from the jobs figures, you'll find that 3 of the 4 months measured in this year aren't that different than the months before it.

Private sector jobs - mining July 2014-April 2015
July 2014 +234,700
Aug 2014 +206,500
Sept 2014 +227,600
Oct 2014 +217,100
Nov 2014 +414,000
Dec 2014 +318,300
Jan 2015 +209,400
Feb 2015 +275,100
Mar 2015 +106,300
Apr 2015 +227,900

Even including that slowdown in the oil industry, jobless claims continue to stay down at the lowest levels in the 21st Century. And if you look at page 6 on the recently released Wisconsin Economic Outlook from the Wisconsin Department of Revenue, IHS Global Insight's update from March 2015 indicates that there still should be 3.2 million additional jobs in 2015, which would mean that job growth should rebound above 250,000 a month for the rest of the year.

What's also intriguing in the Wisconsin Economic Outlook is that while it spins that Wisconsin's economy is doing well, it also predicts Wisconsin will continue to lag the national rate, and not by a little.
The Wisconsin jobs recovery continued in 2014 and the forecast calls for this trend to continue. The Current Employment Statistics (CES) data shows that total employment increased 1.3% in 2014 following the nationwide strong growth of the labor markets. The forecast expects even stronger labor markets in 2015. Wisconsin employment will grow 1.5% in 2015, while the national employment increases 2.3%.
We'll get another idea on where this is heading when we see the April jobs numbers for Wisconsin in the coming week, and given that good weather took a while to take hold in the state this Spring, I'm wondering if the usual April pickup will be delayed by a bit. As it stands today, the Walker jobs gap is over 80,000 private sector jobs, and we will need an increase of 4,600 not to fall further behind.

More data is sure to come on the state and national economy, but right now it feels like a holding pattern of decent-but-not-amazing growth, and a mature expansion. Between that and a record-high stock market with lots of mergers and start-ups, it feels a lot like 1999-2000 from an economic perspective, without as much of the wage growth that we saw in those times. The question is- what happens from here, and what's the next move that sends the economy into a more definitive direction (up or down)?

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