this Wisconsin Department of Revenue economic outlook May Forecast It came out yesterday. Wisconsin’s outlook improved as the US outlook improved (from S&P Global Market Insights, formerly Macroeconomic Advisers and IHS Markit).
figure 1: Forecasts for Wisconsin’s April nonfarm payrolls release (blue), December 2022 release (tan), May economic outlook forecast (sky blue squares), and February economic outlook forecast (tan squares). Source: U.S. Bureau of Labor Statistics and Wisconsin Economic Outlook (possible, February).
figure 2: Forecasts for Wisconsin’s March GDP (blue), December 2022 GDP (tan), May Economic Outlook forecast (sky blue squares), and February Economic Outlook forecast (tan squares).Source: U.S. Bureau of Labor Statistics and Wisconsin Economic Outlook (possible, February).
How do the DoR forecasts compare to models based on correlation with US GDP? I estimate a first-difference regression from 2005Q1 to 2022Q4; the adjusted R2 is 0.83, a coefficient no different than 1. In Figure 3 I show US GDP, forecast, Wisconsin GDP, DoR forecast, and the forecast generated using this equation.
image 3: U.S. GDP (black, left axis), May Professional Forecaster Survey Median (red, left axis), Wisconsin GDP (blue, right axis), May DoR Economic Outlook forecast (sky blue squares, right axis) and regression-based forecasts (pink, right scale), 60% prediction intervals (gray line, right scale), all in bn.Ch.2012$ SAAR. Sources: BEA, Philadelphia Fed (May), WI of DoR (May), and authors’ calculations.
