2024 ended with strong consumer spending and overall econ growth.

At the end of last week, we got two important reports from the Bureau of Economic Analysis that showed the US economy finished up 2024 in a good place. On Thursday, we got the first look at Q4 GDP, which indicated that growth kept up as the year ended.

Gross domestic product, a measure of all the goods and services produced across the sprawling U.S. economy during the period, showed that the economy accelerated at a 2.3% annualized inflation-adjusted pace in the fourth quarter. Economists surveyed by Dow Jones had been expecting an increase of 2.5% after growth of 3.1% in the third quarter.

The report closes out 2024 on a somewhat downbeat note, though growth held reasonably solid. For the full year, GDP accelerated 2.8%, compared with 2.9% in 2023. Growth was 2.5% from Q4 of 2023 to Q4 of 2024. Thursday’s release was the first of three estimates the department’s Bureau of Economic Analysis will provide....

Growth held up largely on the backs of consumers who continued to spend briskly despite the ongoing burden of high prices on everything from homes to cars to eggs at the supermarket. While inflation is well off the boil from its mid-2022 40-year high, it remains a burden for households, particularly those on the lower end of the income scale.

Consumer spending rose at a robust 4.2% pace and, as usual, amounted to about two-thirds of all activity. Government spending also provided a boost, accelerating at a 3.2% level.

Not bad at all, and the 2.3% rate is a bit misleading, as the number would have been closer to 3.3% if it wasn't for a drawdown in inventories. In fact, if you look at the GDP number without the volatile inventory figure and keep it to the private sector, we had our strongest quarter of growth in nearly 2 years.

It's also worth noting that consumption was even stronger than it had been, adding more than 2.8% to GDP in the last 3 months of 2024. But at the same time, I'd note that almost all other components of GDP shrunk compared to what we'd seen for much of the last year.

Following that GDP report, we got the always-important income and spending report on Friday for December, and it showed that things were still in the same solid growth trend that we'd seen for much of this last year.

The personal consumption expenditures price index increased 2.6% on a year-over-year basis in December, 0.2 percentage point higher than the November reading and in line with the Dow Jones estimate.

Excluding food and energy, core PCE registered a 2.8% reading, also meeting expectations and the same as the prior month. Though the Fed considers both readings, historically officials have seen core as the better gauge of long-run inflation.

On a monthly basis, headline PCE rose 0.3% while core increased 0.2%, both in line with forecasts as well....

The report Friday also showed that personal income increased 0.4% in December as forecast, while spending rose 0.7%, or one-tenth of a percentage point ahead of the estimate.

Inflation-adjusted consumer spending continued its consistent growth pattern that's been going on for the better part of 2 years, as inflation subsided from their peaks of Summer 2022.

I'll also note that this report revised its per capita income numbers based on December estimates from the Census Bureau that showed larger population growth from immigration than previously known. And as a result, it's slowed the growth of inflation-adjusted disposable income per capita from what we had, although it still shows decent growth over the last 2 1/2 years and is well above where we were 5 years ago.

So maybe this lower per capita figure could explain why some more Americans could believe the economy wasn't as good as the overall numbers indicated, but it still didn't stop them from spending money over the last couple of years. The gap between spending growth and income growth does seem to be getting larger, however, and the US savings rate is now under 4%, the lowest rates since the high-inflation times of 2022.

What I see out of this is that the economy was in a good place as Donald Trump took office, but that growth could be significantly slowed and/or stopped if consumers stopped spending so freely. And if something would happen to reignite inflation, maybe consumers wouldn't be as keen to pay those prices, and the economy would quickly fall into recession, since there isn't a lot else to maintain the momentum if the consumer stops contributing.

In response to Trump’s 25% tariffs on Canadian goods, Canada announced 25% retaliatory tariffs on American goods — beer, wine, bourbon, fruits, vegetables, clothes, perfume, household appliances, plastic, lumber, etc. I bet Americans will soon learn a very painful lesson about how tariffs work, eh?

— Jon Cooper (@joncooper-us.bsky.social) February 2, 2025 at 7:09 AM

Oh....

Sure enough, Wisconsin tax revenues revised higher for next budget

I predicted this after seeing the numbers from November and December, and today, Wisconsin's Legislative Fiscal Bureau concurred.

The Legislative Fiscal Bureau today projected the state will now finish the 2023-25 budget with a $4.3 billion surplus, while upping expectations for how much Wisconsin will collect in tax revenue over the next two years.

In November, the Evers administration projected the state would finish this budget with a $4 billion surplus.

But the LFB today said it now expects tax revenues to be $894.3 million higher than what the administration had expected in November, driven largely by revised estimates for sales tax collections through mid-2025....

Along with a $4.3 billion surplus at the end of this biennium, LFB projects the state will see an additional $1.85 billion in tax collections in the next two years.

Well that seems like a big deal, and indeed, it means that we should have between $256 million and $354 million in additional funds to utiltize in each of the next 3 fiscal years. Which is pretty close to where we I estimated we were trending based on December's numbers.

That being said, there are a lot of economic assumptions the LFB had to go on, in a time where there is a LOT of uncertainty as to what policies are going to be in place in the next 2 years, and the effects of the policies. Here's what LFB is going with.

The 2025 forecast is based on the following key assumptions. First, Treasury is expected to undertake "extraordinary measures" to meet its debt obligations, now that the debt ceiling is no longer suspended, and the debt ceiling is expected to be increased without a government shutdown. The forecast assumes: (a) an extension of the individual income tax provisions in the 2017 Tax Cuts and Jobs Act (TCJA); (b) some exclusion of tip and overtime pay from federal income taxation; (c) the corporate tax rate is reduced from 21% to 15% on domestic production; and (d) Medicare and Social Security benefits continue to be paid. Second, it assumes that state and local budgets have returned to deficit, after having been supported by stimulus relief measures in 2021 and 2022. However, unspent pandemic-era stimulus funds and ongoing [infrastructure bill] funds are expected to mitigate pressures to reduce state and local spending. Third, the forecast assumes a reduction in net international migration by 500,000 per year (equal to 0.15% of the U.S. population) for the next four years. Fourth, S&P Global anticipates that the Federal Reserve will reduce the federal funds rate by 25 basis points both in March and June of 2025, before pausing until the third quarter of 2026. Fifth, the forecast assumes a 10% universal tariff and a 30% tariff on imports from China, which is expected to increase the average effective tariff rate from 3.0% in the first quarter of 2025 to 16.4% by the first quarter of 2026. Finally, it assumes that growth in real, trade-weighted foreign GDP will remain at 2.0% in 2025 and rise to 2.2% in 2026. Foreign CPI inflation is expected to fall to 2.5% in 2025 and 2.2% by 2028.

Lots of "we'll see" there, especially on no government shutdown, extending the GOP Tax Scam and in Congress signing off on Trump's gimmick involving income from tips (and corporate bonuses?). I suppose a lot of this will be cleared up in the next 6 weeks, when funding runs out for the federal government and any tax plan will likely be debated as part of that.

Also, did you catch the items about a relatively small decrease in immigration and the assumption of tariffs being put in place? Let's see where that goes as well. Interestingly, the LFB thinks that the tariffs will give a boost to the state's tax revenues, because it'll raise the prices on products.

CPI slowed to 3.0% in 2024, down from 4.1% in 2023 and 8.0% in 2022. As predicted, core CPI, which excludes food and energy prices, exceeded overall CPI, growing 3.4% in 2024. S&P Global expects the growth in CPI to slow to 2.9% in 2025, before increasing to 3.3% in 2026. Higher CPI growth in 2026 is based on S&P Global's expectation that President Trump's proposed tariffs will increase domestic prices. CPI is projected to slow to 2.2% in 2027. S&P Global estimates core CPI growth at 3.2% in 2025 and 2026, and 2.1% in 2027...

Sales tax revenues in the next biennium are estimated at $8,140.0 million in 2025-26 and $8,375.0 million in 2026-27, reflecting growth of 4.9% and 2.9%, respectively. These estimates reflect higher November and December collections (compared to November projections) and utilize an updated forecast from S&P Global that incorporates President Trump's proposed tariff policies, which are expected to increase inflation and nominal consumer spending.

So with expectations of inflation around or above 3% in each of the next 2 years, it likely means there should be some kind of allowance for spending to rise by more than what might have been expected a few months ago.

And because there is nearly zero certainty over what fiscal policies are going to be coming out of DC in the next few months, and the effects those policies may have on state funding and services, it would be insane for Governor Evers to sign off on any WisGOP tax cut that they try to push through in the coming weeks. In fact, if I were Gov Evers and Capitol Dems, I would go out of my way to mention that the good economy of the Biden years and Evers' stewardship as governor have led to this good revenue picture, but the Trumpian idiocy in DC is stopping any immediate tax cut to take advantage of these higher-than-expected numbers.

Regardless, the LFB estimates show that there should be plenty of funds available in these coming years to take care of the many needs in this state that have been neglected during the 14 years that Republicans have run the State Legislature. Or this surplus can help to make up for Trump/GOP budget cuts in DC. Either way, let's take advantage of these good times and get real investments and changes in place with the billions we have to play with.

Trump Admin is stealing federal tax dollars! Cmon Dems, make GOPs pay for this THEFT

As others have said, don't look at the stupid stuff and words coming from TrumpWorld. Look for the real damaging stuff that is being done behind the scenes.

NEW — OMB temporarily pauses all agency grants and loans programs. Per copy of memo: "The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve."

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— Marisa Kabas (@marisakabas.bsky.social) January 27, 2025 at 5:04 PM

The @washingtonpost.com now confirms my earlier reporting:

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— Marisa Kabas (@marisakabas.bsky.social) January 27, 2025 at 8:10 PM

Everything is extremely chaotic but the best info we have so far suggests that Trump’s “stop funding” EO would cover: Medicaid ESSA funds IDEA Snap School meals WIC Head start grants Child care block grants Pell grants Student loans Higher Ed grants Housing vouchers CTE Devastating beyond words.

— Leah Greenberg (@leahgreenberg.bsky.social) January 28, 2025 at 7:54 AM

This is THEFT, folks. The Trump Administration is stealing money that BY LAW was allocated and set aside for specific things, and now they're just holding onto it and could redirect it to go in their own pockets and/or the pockets of whoever kisses up to them.

Ok, Dems? There's your easy message. The Trump Administration is STEALING TAX DOLLARS for no legitimate reason beyond self-enrichmwent and power-grabs. Not only do I want immediate lawsuits this morning against this impoundment (which I will repeat, IS AGAINST THE LAW), this is worthy of impeachment.

Sure, GOPs in the House and Senate won't go along with it, but fuck em. Make them go on the record and say that their job in Congress is a phoney-baloney gig without power, because they allow a sundowning 78-year-old President and his wack-job puppetmasters to do whatever they wants, including ignoring whatever Congress passed into law.

And most of these stolen funds go to states, including Wisconsin, as Marquette professor Phil Rocco reminds us.

To put the OMB grant freeze in context, roughly 17.5% of Wisconsin’s revenue comes from federal grants in aid last I checked. Overall, federal grants account for roughly 36% of all state government budgets in US. In a number of states the federal share is even higher.

— Phil Rocco (@philiprocco.bsky.social) January 27, 2025 at 9:12 PM

It's not like the WisGOPs don't know this. Check out this comment from when asked why we are only 1 of 2 states that have not guranteed a full year of Medicaid benefits to help new mothers.

“I think it’s a little premature to have any discussions about the Medicaid budget right now. We have a brand new administration coming into D.C.,” Rep. Tyler August, R-Walworth, said last week. “I think the Trump administration is actually going to put some common sense into some of these programs federally.” Assembly Number 2 Tyler August

"Common sense"? From the Trump folks? That's hilarious, Number 2.

What August means is that Trump/GOP wants to use Medicaid cuts to keep the GOP Tax Scam going beyond this year, so they can't count on the feds covering enough of the bill if postpartum Medicaid was expanded. One problem, Tyler. We'd have to make up the lack of federal spending on all forms of Medicaid, which accounted for well over half of the $14.25 billion that our state spent on benefits.

So if those funds get cut, we're going to have to spend more state dollars. Which means that Governor Evers and every Dem at the Capitol should tell Rep. August, Robbin' Vos and the rest of the GOP Legislature that there won't be any tax cuts at the state level if the Trump/GOPs insist on stealing funds from the US Treasury.

Also, most GOP-run red states need that federal money more than Wisconsin. The taxes that states like New York and California send to DC get redirected to those in need, and because red states are wracked with poverty and underinvestment, due to lousy GOP policies at the state level, they get more of those funds than most. I would hope Dems in Congress go on the attack and hammer every GOP from a GOP-leaning area, and tell their constituents they are choosing Donald F'ing Trump over their everyday needs. And that Trump will raise the taxes of everyone by cutting off aids to states.

Yes, this impoundment by TrumpWorld is an outrageous move. But I'm not a Dem lawmaker and it's not my job to be consumed by the Trump/GOP douchebaggery of the day. It's up to our elected officials and others who have jobs in politics to make this THEFT an issue and mess up all other GOP plans until the theft stops. And there is no compromise to be had on illegal BS like this.

PS - Gov Evers has already sent a letter that basically asks "Hey Trump. WTF is going on here?"

More Sconnies found work and jobs in 2024, and things were good as the year ended

It was a mixed picture in Wisconsin's last jobs report for 2024 and the Biden years, but things were overall still in good shape.

The Wisconsin Department of Workforce Development (DWD) today announced new record-high employment during December 2024, according to preliminary estimates from the U.S. Bureau of Labor Statistics. This total, 3,076,500 employed, is the eighth consecutive monthly record for state employment.

Preliminary employment estimates for December 2024 showed Wisconsin's seasonally adjusted unemployment rate ticked up to 3.0%, which is 1.1 percentage points below the national unemployment rate of 4.1%. The state's labor force participation rate increased to 65.9% in December while the national rate stayed at 62.5%.

• Place of Residence Data: Wisconsin's unemployment rate was 3.0% in December, 1.1 percentage points below the national rate of 4.1%. Wisconsin's labor force increased by 5,000 over the month and 20,100 over the year. The number of people employed increased 2,500 over the month to a record-high 3,076,500 employed.

• Place of Work Data: Total nonfarm jobs decreased 1,200 over the month and increased 20,300 over the year to 3,042,100 jobs.

The record amount of "employed" in Wisconsin comes from the household survey, which has showed an impressive run up in both the number of Wisconsinites available for work in 2024 after some flatlining in the last half of 2023. It also shows that Joe Biden's term in office was especially good for workers in our state as we recovered from the economic effects of the COVID-19 pandemic.

It also illustrates that the rise in unemployment from 2.9% to 3.0% was for the
"good reason", where a sizable number of the people who joined the Wisconsin work force in December 2024 got jobs, but not all of them. And the number of people unemployed in Wisconsin is basically the same as it was at the end of 2021, but the labor force and number of employed people has grown by nearly 72,000.

As for the loss in overall jobs? That's due to a seasonally-adjusted 4,500 lost jobs in local government for December, which likely reflects delays in colder-weather layoffs and a lack of need to hire for snow plowing and other Winter maintenance because of low snowfall totals. The private sector gained 3,300 jobs in December for its best gain since May, and resulted in a gain of a little over 16,000 private sector jobs for 2024.

No, it's not blowout figures and the job growth has slowed, just like it did in the nation as a whole in 2024. But it does put down a MacIvered talking point that WisGOP hacks recently tried that said most of Wisconsin's job growth was Soviet-style public sector positions and therefore not legitimate. UW-Madison's Menzie Chinn refuted that garbage in Econbrowser this week, and these new numbers make that MacIvered argument look even more foolish.

The low unemployment and continued job growth in Wisconsin in 2024 are likely to be a main reason behind what I bet are boosted revenue projections that should be released by the Legislative Fiscal Bureau some time in the next week. And yet, just enough voters in Wisconsin and nationwide thought that this situation wasn't good enough, and wanted to change parties in the White House and the policies that went with that?

Got a feeling we'll be looking back at where things were at the end of 2024 as something we'll wish we could get restored to by the end of 2025, and especially 2026. And we shouldn't let people forget what we had in Wisconsin before Donald Trump and the rest of the GOP took over in DC.

Your guide to the upcoming Wisconsin state budget

The new series of Informational Papers from the Legislative Fiscal Bureau are now out. Feel free to give it a click and learn more about all of these programs, their rules, and their funding amounts.

Just letting you know, as having this background allows you to improve your BS detector when certain claims are made.

New revenue figures might mean that $4 billion in Wisconsin's bank gets larger

Saw that the newest Wisconsin monthly revenue report came out today. The December numbers mark the halfway point of this current fiscal year, and come just ahead of the Legislative Fiscal Bureau's revenue estimates for Fiscal Years 2025-27, which will help form the baseline of Tony Evers' next budget.

And the revenue figures have been coming in strong so far for FY 2025, up by 5.2% overall compared to the same first 6 months of FY 2024, with income taxes up by 8.4%. If those trends hold up for the next 6 months, we will have $450 million more in the bank than what the Wisconsin Department of Administration estimated 2 months ago, and even with the same rate of growth for the 2 years of the next state budget, we would be nearly $470 million above estiamtes for each of those years.

So if we continue to see strong revenue growth for the next 6 months, we could be seeing more than the already-impressive $4 billion that we are projected to have in the bank at the end of June. And we'd have approximately $1.3 billion available to take care of things in the upcoming state budget. But lots to play out between now and the end of the fiscal year, especially with tax-filing season looming. There's also a lot of uncertainty over what (if any) differences may be coming from DC in terms of taxes and spending in the next few months.

These variables make it all the more absurd that the GOP Legislature wants to cut income taxes in the coming weeks, before Evers submits his own budget, and before anyone knows what the fiscal changes will be at the state and federal levels. But that's the entire point of that idiocy, right? To limit the possibilities of using those billions on our many unmet needs in this state by giving it away in the form of tax cuts to the rich.

Let's not do that, shall we? At least not yet. But between sub-3% unemployment and these good revenue numbers, Wisconsin's in a very strong place at the start of 2025, and we need to make the investments to keep things in that good place as long as we can.

CPI goes up, and yet Wall Streeters think that inflation situation got better?

After a moderate increase in the Producer Price Index of 0.2% on Tuesday, many were looking at the inflation report from the consumer side, which hit today.

JUST IN: Inflation remains stubborn. Inflation rose 2.9% (y/y) in December —> the highest annual increase since July. For the month of December alone, inflation rose 0.4% —> the highest since March. Energy (esp. gas) accounted for 40% of the increase. Food also up. Core CPI rose 3.2% (y/y).

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— Heather Long (@byheatherlong.bsky.social) January 15, 2025 at 7:37 AM

Inflation is back near 3% (it was 2.9% in December). The Fed's goal = 2% "Core inflation" down in December, but that's not much comfort to the middle class. Bottom line: It's going to be a battle in 2025 to get inflation fully gone. This is a warning to Trump as he readies tariffs and big tax cuts

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— Heather Long (@byheatherlong.bsky.social) January 15, 2025 at 7:42 AM

Well, that's not going to be good news for the financial markets, who have been worried about the spectre of inflation going back up, which caused Treasury yields to run up over the last month. So it's a down day on Wall Street, right?

WHAT? To me, this would seem like things are going in the wrong direction. And with oil futures back above $80 for the first time in 6 months, that's not help calm down inflation. So why was it such a good day for stocks?

Prices climbed 0.2% month-on-month on a "core" basis, which strips out the more volatile costs of food and gas, an easing from November's 0.3% gain. Over last year, core CPI rose 3.2%.

Until the latest print, annual core CPI had been stuck at a 3.3% gain for the past four months. December was the first time since July that the metric reflected a deceleration in price growth.

The 10-year Treasury yield dropped over 13 basis points to trade around 4.65% after the cooler-than-expected reading. It had been up at its highest level in more than a year, serving as a headwind for stocks. The interest-rate-sensitive small-cap Russell 2000 Index soared in reaction, rising almost 2%.

So the Wall Streeters looked at a relatively tame core CPI and ignored the fact that Americans were paying higher prices overall. Interesting choice.

I looked inside the CPI report, and there isn't a lot there that indicates the 0.2% increase in core prices for December is any major change in direction vs the 0.3% increase in November. Shelter was up 0.3% last month, just like the month before (and up 4.6% for all of 2024). New vehicles were up 0.5% vs 0.6% in November (both are big numbers), and used vehicles went up 1.2% after a 2% increase in November and 2.7% in October. Airline fares jumped by 3.9% in December, and had a 3.2% increase in October. Apparel was up 0.1% vs 0.2% for November, but that's only gone up by 1.2% over the last 12 months, so that wasn't really going up to begin with.

I think these Wall Streeters are trying to make lower inflation and lower interest rates happen by their hopes, and not going on what actually was in that report. And there's nothing in the inflation reports of this week that tell me the story is any different than what we had going into the week. We have a strong jobs market with low unemployment, and prices continue to rise at an elevated but not destructive level of 2.5-3%.

Good spot to be in, but nothing that should cause the Fed to change course from what they indicated last month. As I plan to head to Vegas this weekend, the attitude of these coked-up traders with the Trump Inauguration looming reminds me of the scene in The Big Short that takes place in Sin City, where the people who have seen through the fraud and house-of-cards nature of the US housing market take advantage of a number of morons in the mortgage industry that are high on their own supply.

Yeah, we got $4 billion in the bank. But big needs remain, and Trump/GOP isn't gonna help

As another Wisconsin budget cycle begins, we again are likely to have several billions of dollars that are available to be played with. But as WTMJ host and Journal-Sentinel columnist Kristin Brey notes, just because there's a lot of money in the bank, it doesn't mean that all of our needs are taken care of in this state.

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Brey went into more detail at the JS website as to the problems and costs to our economy that are a result of not using those extra dollars in the bank to take care of these needs. In addition to the numerous years of the GOP Legislature refusing to add adequate funding to either the UW System or K-12 schools, Brey points out that there are other areas that need to be attended to in Wisconsin.

➤A child care industry on the brink? Nearly nine in 10 working parents say child care costs them time and productivity at work. Lost wages and fewer sales mean less tax revenue for local, state and federal governments. The Council for a Strong America estimates the child care crisis already costs Wisconsin families, businesses and governments a combined $1.9 billion every year.

➤Municipal and county governments struggling to provide local services? Despite 2023's monumental Act 12 shared revenue bill last year, local leaders from municipalities and counties across the state say the changes fell short of solving their budgetary challenges leaving some to turn to operational referendums to raise the local property tax levy just to maintain the services they currently provide.

➤Do we have two state prisons that are literally uninhabitable? 2024 was marked by a lot of troubling news about our corrections system. From lengthy lockdowns, to inmate deaths, to spotty medical care and even the arrest of Waupun’s warden and staffers for alleged misconduct and abuse. We also still have two (barely) operating state prisons that were built in the 1800s that state leaders haven’t been able to find the political will to close for almost half a century.

➤A looming assisted living and nursing home crisis? The “Silver Tsunami” is coming, but our assisted living and nursing home quality and accessibility are already under duress. Understaffed facilities, underpaid and undertrained employees, some of the lowest Medicaid reimbursement rates in the country, increased demand for high-needs facilities, all of these problems will only get worse across Wisconsin in the coming decade if left unaddressed.

➤Are middle and lower class people struggling to get by? Republican lawmakers have made it clear that their priority this year is to provide tax cuts. Will they prioritize giving the bulk of the benefits to the more needy filers making less than $100,000 instead of those making more than $100,000?

Even before we get to tax cuts, we need to remember that state agencies have already asked for much more money in this budget to handle their needs compared to the money that might be coming in to the state's coffers. As a result, if all those requests were funded, the Evers Administration says we'd see that $4 billion be gone by the end of this next biennium.

That reality of large unmet needs makes it all the more cynical and absurd that Assembly Speaker Robbin' Vos and GOP Senate Leader Devin LeMahieu want to pass a tax cut bill before the spending part of the budget is even introduced. And you can bet that tax cut won't be anything that gives most of the benefits to middle and lower-income Wisconsinites - and might not give them anything at all. In addition to what will likely be a regressive scheme, the tax cut would be intended to limit the amount of available funds to make it near-impossible to fund most of the needs that we still have.

That's all the more reason for Governor Evers to veto that scheme and put his own tax package in the larger budget, but I'd also add that we need to wait to see if the Trump Administration and the GOP Congress are able to impose the austerity measures that they want to sneak through. If that happens, it could reduce a sizable amount of federal money that this state is counting on for support services and infrastructure needs, and there might be a need to add more state funds just to keep Wisconsinites from falling even further behind.

So even though Wisconsin's budget picture is among the best in the nation, with lowered debt and billions in the bank, let's not pretend that there isn't a need to improve things further in how we tax people and choose to invest our tax dollars in. I'd feel a lot more comfortable in the ability to have things taken care of if we still had a Democrat in the White House, but too many dopes chose otherwise this November, and now it would be even more foolish for our state to cut taxes and refuse to continue investments to improve quality of life and economic competitiveness as a result.

Last jobs report of the Biden Era completes a great record

We got the last jobs Friday for Joe Biden's term in office. And it added to what was already an already-impressive record.

JUST IN: A strong December jobs report. The US economy added 256,000 jobs (well above expectations). Overall, the US added 2.2 million jobs in 2024. That’s about the same as 2018. Unemployment rate fell slightly to 4.1% Wages grew 3.9% in past year (well above 2.7% inflation)

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— Heather Long (@byheatherlong.bsky.social) January 10, 2025 at 7:46 AM

In fact, Wall Streeters thought the jobs report was too good. And the stock market had a significant drop as a result.

US stocks plunged Friday as investors digested a better-than-expected jobs report that soured expectations of future rate cuts from the Federal Reserve.

The Dow dropped by 697 points, closing at 41,938, while the S&P 500 fell by 1.5% and the tech-heavy Nasdaq index was lower by 1.6%....

Rising yields signal concern about a stronger-than-expected economy, resurgent inflation and potentially fewer rate cuts in 2025 than anticipated.

“The strong jobs report sent yields higher amid expectations for the Fed to pause its rate cutting cycle for a significant period of time,” Ross Mayfield, an investment strategist at Baird, wrote in a note Friday.

Oh no! Can't have too many people working and making money at their jobs. How's that any good for continual profits? Although I have suspicions that the Trump/GOPs have some plans to deal with that "problem".

I'll put in the caveat that this jobs number is before we have the annual benchmarking that happens next month, where the previous monthly reports are closer matched to later data. And we know that there is likely to be a downward revision as a result of that, which means that there will likely be a slowing of job growth for both 2024 and 2023.

However, we still had average job growth of 160,000-170,000 per month, and given that we started 2024 at an unemployment rate below 4%, that's remarkable.

As usual, the biggest gainer was the health care sector, which added another 46,000 jobs in December and 681,000 jobs for 2024. After losing people during the depths of the COVID and being slow to recover as the pandemic re-fired in the winter of 2021, there have been nearly 2 million jobs added in Health Care since the end of 2021.

On the goods side of employment, construction saw another month of seasonally adjusted gains (+8,000) and nearly 200,000 for the year. But manufacturing employment continued to struggle, losing 13,000 jobs in December, 40,000 since September, and 88,000 since May. Then throw in the losses that were projected in the initial benchamrking process, and this time next month, we may find out that there were fewer manufacturing jobs than there were at the start of the Biden Administration.

The decline in manufacturing jobs in 2024 is something to keep our eyes on for next year, to see if that continues, or if the large number of factories that have been being built over the last 2 years starts translating into added employment.

The manufacturing losses are one of the few downsides of what was otherwise an economically successful 4 years for America under Joe Biden. Yes, things cost more than they did in December 2020, but on the average Americans made more money during Biden's term in office, and more people got jobs and kept working.

Now the Former Guy is going to walk into a full employment, growing economy as he takes office in January 2025.

No president has ever gotten a better economy handed to him that Donald Trump.

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— Dean Baker (@deanbaker13.bsky.social) January 11, 2025 at 10:50 AM

So let's see the results as Trump/GOP try to screw up what's been working for the 2020s in this country. We need to remember what things are like now, and compare it to what things will look like next year, and the year after that, and the year after that.

It's well past time to adjust the SALT Cap in the Tax Scam

As you may be aware, I despise the massive giveaways to the rich that were part of the costly GOP Tax Scam of 2017. And while I'd be supportive of the whole Scam going away when those tax cuts expire next year, one place in particular where I would like to see changes made is with the limitations put in on deductions for State and Local Taxes (SALT).

The SALT Cap was put in place with the rest of the Tax Scam in 2017, and like much of the rest of the tax package, there wasn't enough votes to change it even when Democrats had control of the House from 2019-2023 and the Senate from 2021-2023. Now the question becomes whether Republicans can oversee changes to their own Tax Scam that would raise or even remove the SALT Cap as part of the expiration of the Tax Scam at the end of 2025.

And it looks like the tiny majority the GOP has in the House might allow several swing-seat Republicans the opportunity to work out a deal on the SALT Cap, as it appears that issue will be a centerpiece of a meeting at Mar-a-Lago among GOPs this weekend. Even if GOPs try to keep the rest of the Tax Scam in place, it may well be the case that the SALT Cap gets some kind of adjustment.

While exact details weren't available, one proposal being discussed would allow married couples to deduct $20,000 of their state and local taxes from their federal income taxes. Under current law, married couples can deduct only $10,000, which is the same for single taxpayers.

In return, the so-called SALT Republicans will be expected to fall in line behind a sweeping tax bill the GOP hopes to enact later this year, two sources familiar with the new administration’s thinking told POLITICO, who were granted anonymity to discuss the internal strategizing.

The lawmakers — who represent politically competitive, high-tax districts where constituents have been dinged by the SALT cap — haven't ruled out pushing for other changes, though....

It’s possible that the group will push for something more than doubling the deduction for married couples, which the lawmakers call a "marriage penalty." The New Yorkers [in the group] are quick to point out that Trump himself pledged at a campaign rally in Long Island to expand SALT relief — and that the blue districts they represent are some of the most competitive in the country.

Let’s go back to 2018’s House elections, which took place 1 year after the SALT Cap and the rest of the GOP Tax Scam was put in place. Note that a significant part of the Democrats’ gains came in states such as California (6 seats), New Jersey (4 seats), New York (3 seats), and Illinois (2 seats) and Minnesota (2 seats).

The biggest argument against any type of SALT Cap change is that the move would end up being regressive, as the bottom 3/5 of incomes generally would get a bigger benefit from using the standard deduction in all situations. The best breakdown I could find in recent times came from the Institute on Taxation and Economic Policy (ITEP) in 2021. And it used an example of raising the SALT Cap to $15,000 for singles and $30,000 for married couples to show how it would limit the cost of the tax breaks, and keep the richest Americans from getting a windfall.

This is where we need to remember that the SALT Cap has not been adjusted to the inflation Americans have dealt with since the Tax Scam was put into effect. If you punch up the inflation calculator, and look at how much $10,000 in December 2017 would be worth today, you get nearly $12,800. Add another 2.74% for 2025 (to match what the standard deduction will increase by due to inflation), and you get $13,150. Then throw in the marriage penalty part, which is rare for a deduction not to be doubled up for married, joint filers, and it's especially infuriating for 2-income married couples (raises hand).

This is where I'll remind you that Paul Ryan and company put that marriage penalty into the Tax Scam as a way to limit the absurd overall cost of the package, because God Forbid we make mega-millionaires and billionaires pay another 1% in tax instead.

Still soooo punchable.

So let's fix that flaw, index the SALT Cap to inflation and then double the Cap for married joint filers, which would increase the Cap from $10,000 today to $26,300 for a married couple. Given that we have an upper middle-class income (and the state taxes that go with it) and are facing a property tax bill of more than $9,200, expanding the SALT Cap could well allow us to write off our property taxes, state income taxes, mortgage interest, and charitable gifts – which we have not been able to do since the Tax Scam came into being.

And I’m betting I’m not alone in Wisconsin these days, especially in a time of rising property taxes, rising incomes, and rising home values. I understand that many people have it worse than me, but that doesn’t change the fact that it’s been the upper middle-class that has been the group hurt by the GOP Tax Scam and the SALT Cap that went with it. And a combination of approving a wider SALT Cap for married couples but keeping some limits on it will be the sweet spot that doesn’t give huge benefits to the rich, but does help those that would be more likely to take advantage of the relief, and it might well help make housing more affordable and worthwhile for people.

I know it's not thought of as particularly progressive to support a tax cut that helps upper-middle class and upper-class taxpayers. But I see the change in incentives and targeted limits of assistance to be helpful for our economy and fairer in general. Dems should ask for SALT Cap changes to be separated out from the rest of the Tax Scam, and if GOPs won't do that and chooses to fold it into the larger tax package, then they don't get any help and the deficit-busting package goes down in flames.

Sounds like a win-win to me!

Wis vouchers gain and community schools lose for 14 years. Time to reverse it

I see that Gov Evers is going to add at least some funding for K-12 public, community schools in the upcoming budget.

Evers used his partial veto authority in the 2023-25 budget to write into state law an annual increase of $325 per student over the next four centuries. The increase applies to the cap on how much schools can increase spending through a mix of state aid and property taxes. GOP lawmakers challenged Evers’ move with the state Supreme Court.

Vos, R-Rochester, suggested last month if the court upholds Evers’ veto, “schools are mostly off the table,” and GOP lawmakers will focus their attention on other areas of the 2025-27 state budget.

“Honest to God, that is a joke,” Evers told reporters on Friday as he previewed his coming budget and answered questions.

Evers added, “there’s going to be more” for schools when he introduces his budget next month.

This is where we need to take a step back and remember that there are 2 items that are key when we talk about “K-12 public school funding”.

The first is the total amount of state tax dollars that are given into K-12 education, which is mainly General Aid from the state (which is adjusted based on property values in a certain district, with districts with a lower property tax base getting more aid) and per-pupil aids, which are separate payments that are sometimes (but not often) OK’d by the State Legislature, and are based on student enrollment.

The second are revenue limits, which give a combined total of per-student General Aids and property taxes that are allowed for each district, with the revenue limits not accounting for funds paid for by categorical aids such as funds to deal with high poverty or special education (although special ed is horribly underfunded in Wisconsin with most of its costs being used by funds that are part of the revenue limit).

The revenue limit is what Evers’ creative veto was about, putting in a $325-per-student increase in K-12 public school resources for every year until the law is changed. That was a rare increase in the per-student revenue limit over the 14 years that the GOP had a gerrymandered majority in the Legislature, and even that $325 per student is not likely to keep up with the rate of inflation in the coming years.

To show how far in the hole K-12 community schools are, let's take the state’s average per-student revenue limit of $10,316 for school year 2010-11, and look at how the base revenue limit would have changed under state law for a K-12 district that was at that average level. Then let's look at what's happened to inflation over the same time period, and I’ll assume a 2.5% annual inflation rate for both 2024 and 2025.

You wonder why so many K-12 districts have ended up having to raise property taxes via referendum under the GOP Legislature? And do you see why we are in need of a sizable increase in state spending to not only increase those sub-standard revenue limits, but also to give some relief to homeowners by not having so much of K-12's costs be put onto the property tax? Also, do you see how the per-student spending limit made a jump in 2024 and then plateaued? That’s not because of Gov Evers’ veto that er-student increases, but is instead because of a GOP-authored provision to increase the revenue limits for the districts with the lowest limits in the state. Yet another reason that it’s been near-impossible to avoid going to referendum to keep the lights on.

Also, do you see how the per-student spending limit made a jump in 2024 and then plateaued? That’s not because of Gov Evers’ veto that the $325-per-student increases, but is instead because of a GOP-authored provision to increase the revenue limits for the districts with the lowest limits in the state. If going under the GOP's revenue limits make an average spending district in 2011 into an unacceptably low-limit district by 2023, you have yet another reason that it’s been near-impossible to avoid going to referendum to keep the lights on.

Now compare the near-zero increase in revenue limits with what's happened to the per-pupil payment in state tax dollars that have gone to voucher schools over the same time period.

The increases for voucher payments were already near or above inflation before 2023, but then the GOP Legislature used budget negotiations to work out an agreement with Gov Evers that traded a relatively small increase in funding for public schools for a huge jump in voucher payments to private schools.

It's pretty clear that gerrymandered GOP control of the State Legislature has corresponded with K-12 community schools having funds and resources taken from them and moved into school vouchers at a sickening level. And I'm not even bringing up how vouchers outside of Milwaukee are funded by literally taking money away from the public school district that the child lives in, even if the kid never attended a day of public school in that district. And that the public school districts are often forced to raise property taxes to make up for those funds being sent out to voucher schools.

Seems like Governor Evers and Legislative Dems could put together a budget that does all of the following:

1. Significantly raises state aids and revenue limits for K-12 community schools to make up some of the significant gap with inflation since 2011. And do it in a way that also cuts property taxes for K-12 schools.

2. Stops increasing payments to voucher schools. I can wish for a decrease back toward parity with state aids to public schools, but at the very least, tell the voucher lobby "You got a big boost in 2023, so you get nothing for the next 2 years." And dare Robbin' Vos and company to defend putting any additional money going in.

3. Remove the funding flaw that takes money from public school districts and sends it into voucher schools. You want 2 tax-funded school systems? Then pay the full costs of both instead of penalizing one for the other.

When you look at the numbers involved and the fact that we will likely have at least $4 billion available to use in this upcoming state budget, there is no reason not to be able to demand these things, and see just how far Robbin' Vos and Devin LeMahieu want to go to keep Betsy DeVos and other oligarch donors happy. Let's see if Gov Evers and a less-gerrymandered Legislature makes a public effort to make it damaging if they try to pass up the chance to cut both property taxes and income taxes because they'd rather keep up Wisconsin's expensive voucher scam instead.

US, Wis population growth got a boost in 2024

One big post-COVID change in America is becoming apparent, as the US population grew by a sizable amount last year.

Immigration in 2024 drove U.S. population growth to its fastest rate in 23 years as the nation surpassed 340 million residents, the U.S. Census Bureau said....

The 1% growth rate this year was the highest it has been since 2001, and it was a marked contrast to the record low of 0.2% set in 2021 at the height of pandemic restrictions on travel to the United States, according to the annual population estimates.

Immigration this year increased by almost 2.8 million people, partly because of a new method of counting that adds people who were admitted for humanitarian reasons. Net international migration accounted for 84% of the nation’s 3.3 million-person increase between 2023 and 2024.

Births outnumbered deaths in the United States by almost 519,000 between 2023 and 2024, which was an improvement over the historic low of 146,000 in 2021 but still well below the highs of previous decades.

As you can see here, relying on immigration for our population growth is a very different pattern compared to how the US added people in the 2000s.

You can see how US population growth declined in the 1st Trump Administration as both immigration and birth rates declined, and how immigration has made up for further declines in birth rate in the last 3 years.

It also reflects the US Census Bureau using more comprehensive information to account for migrants that were missed in previous versions of the American Community Survey (ACS).

The Benchmark Database is a valuable tool for monitoring short-term changes in inflows and allows us to adjust our ACS-based estimates when appropriate. Additionally, our analysis sought to identify which cohorts were not being adequately captured. It revealed that recent humanitarian migrants, the group with the most significant growth in our benchmark data, were also the least likely to be included in the ACS.

To produce the Vintage 2024 estimates, we adjusted our [year-ago residence]-based, foreign-born immigration estimates upward to account for 75% of the humanitarian migrants in our Benchmark Database. We arrived at this adjustment factor after synthesizing different analyses of coverage error in the ACS and in consultation with internal and external migration experts. As noted in Table 1, this adjustment increased NIM [Net International Migration] estimates for the period of July 1, 2021, to June 30, 2023, in Vintage 2024 relative to the value from Vintage 2023.

This adjustment for humanitarian migrants was applied to the national total and then distributed down to states and counties using our usual method. As a result, the state and county estimates are also impacted by the adjustment.

And it ends up making quite a difference in the estimates of that NIM figure.

Moving it down to the states, the Census Bureau says Wisconsin gained 30,570 people in 2024. Like the country as a whole, most of that was through international immigration (+22,146). But there also were gains in births vs deaths (+2,040), and our state led the Midwest in the amount of people moving in from the rest of the country vs Sconnies moving out-of-state.

Net domestic migration, Midwest 2024
Wis. +6,332
Ind. +4,268
Iowa -231
Minn -1,161
Ohio -2,462
Mich -7,656
Ill. -56,235

While it's good to be leading our Midwestern neighbors, Wisconsin adding over 30,500 people still is only a one-year increase of 0.515%, barely half the 0.98% rate of growth that the country has for 2024. And because the US has continued to grow faster than Wisconsin and other Midwest states as a whole, Wisconsin is now on track to lose a member of the House of Representatives after 2030.

Texas and Florida have obviously attracted a lot of people to their states over the last four years, and are on pace to gain multiple new seats in both the House of Representatives and the Electoral College in 8 years. However, a lot of that is through immigration (Texas 38.3%, Florida 57.75%), which makes you wonder if that trend continues if the Trump Administration starts cracking down and deporting immigrants like he and his lackeys claim they will do.

In addition, Florida had a significant slowdown in net domestic migration this year - just above +64,000 when it had gained more than 808,000 from the rest of the country over the 3 years before. And I can’t think that 2 more years of Ron DeSantis Third World BS and increasing numbers and severity of hurricanes are going to make more people want to head that way.

Lots to think about with these stronger rates of population growth in both Wisconsin and the US. It's likely been a big reason behind our surprising economic growth over the last 2 years, even with higher interest rates. But this is another trend that feels like it is going to change in the near future, and the last thing we need are more headwinds from Trump/GOPs who seem likely to already cause a few due to bad policy.