One reader Observe that there are many ways to compare “performance”. So real!
figure 1: Wisconsin 2012 GDP USD (bold black), coincident index (red), nonfarm payrolls (blue), and civilian payrolls (sky blue), all in Q4 2019 = 0 log. Recession dates as defined by NBER are shaded from peak to trough in gray. Light orange indicates Walker dosing. Source: BEA, Philadelphia Fed, BLS via FRED, NBER, and author’s calculations.
Interestingly, while the index is designed to track GDP at the state level, the coincident index has been different from GDP in recent quarters. While growth has been associated with an adjusted R-squared of about 90% over the past four years, it dropped to 80% in 3Q20 to 3Q21. Wisconsin GDP growth and state GDP growth are 98% correlated with adjusted R-squared over the same period. Using nowcasts of national GDP growth yields the following results:
figure 2: Wisconsin GDP in Ch.2012$ (bold black), predicted by log first-difference regression, 2020Q3-21Q3 (red) and 60% forecast interval (grey line). Recession dates as defined by NBER are shaded from peak to trough in gray. Light orange indicates Walker dosing. Source: BEA, NBER and author’s calculations.
That said, using recent historical correlations, Wisconsin GDP growth will accelerate to about 5% q/q SAAR in Q4 (recalling US Q4 GDP growth of 6.7%) (using logarithmic percentages.)
For more information on how these variables relate pre-pandemic, see here work documents.
For high-frequency tracking of national economies, see Baumeister et al.discussed hereand Current weekly economic index by the end of December.
