Early April. Despite some positive indicators, Wisconsinites are quite pessimistic about the state's economy [0]. A possible explanation is that respondents' perceptions of economic conditions differ from their own conditions. Another possibility is that we are misgauging economic conditions.
figure 1: GDP (Ch.2017$) (bold dark blue), GDP (Ch.2012$) (light blue), wages and salaries deflated by PCE price index (tan), private sector hours worked (green), synchronization index (Red), all recorded in the log 2021Q4=0. Hours worked are calculated by multiplying private employment by the author's seasonally adjusted average weekly hours worked using X-13. Source: BEA, Census Bureau, Bureau of Labor Statistics, Federal Reserve Bank of Philadelphia, and author's calculations.
For example, as of last August, real GDP growth in the first quarter of 2023 looked quite impressive. However, with the NIPA data being completely revised to include additional and updated data, GDP growth in the second quarter of 2023 is looking quite bleak. Growth only surged in 20243Q3-Q4. Why is the gap so big? notes The exact source of the discrepancy was not stated regarding the overhaul. The fact is that the contours of the California series, for example, don't show that much of a change, so I suspect this has something to do with how the additional information affects Wisconsin. Total wages were reduced by about half a percentage point. Another issue is that national prices apply to Wisconsin departmental values. So if prices in Wisconsin are systematically higher than nationally, then real GDP will appear lower than it really is.
Real wages and salaries only rebounded strongly in the second quarter (using the PCE deflator here; using quarter-on-quarter CPI, the cumulative increase in the fourth quarter was only 2%). Finally, the Philadelphia Fed Coincident Index only started rising again in the first quarter of this year after remaining stable in 2023.
While (preliminary) employment has leveled off in April, the coincident index, which is based on a number of labor market indicators, has risen sharply.
figure 2: Nonfarm Payrolls (bold black, left scale), Philadelphia Fed Early Benchmark (light blue, left scale), and Consensus Index (red, right scale). Source: Bureau of Labor Statistics, Federal Reserve Bank of Philadelphia [1], [2].
