Wisconsin GDP growth slows in the second quarter to the third quarter of 2022, lagging behind the national deceleration.
figure 1: US GDP (blue), GDPNow in 2023Q1 (light blue squares), Wisconsin GDP (red) and Wisconsin Economic Outlook forecast (pink squares), all logarithmic, 2021Q4=0. Sources: BEA, Atlanta Fed (3/31), Revenue Department and authors’ calculations.
The immediate forecast for U.S. first-quarter growth is 2.9% (annualized quarter-over-quarter). Wisconsin GDP and US GDP increased by one percentage point (adj-R2=0.90), so this means that Wisconsin GDP continued to grow in the first quarter.
The interconnectedness with the rest of the U.S. is enough to explain Wisconsin’s slowdown. Interestingly, however, Wisconsin’s exports took a hit in the second and fourth quarters.
figure 2: Wisconsin Merchandise Exports, $2,000 million, seasonally adjusted (blue). Nominal seasonally adjusted using the X13 census, deflated using the all merchandise export price index. Dates of peak-to-trough recessions as defined by NBER are shaded in gray. Sources: Census, BLS via FRED (EXPTOTWI and IQ series), NBER, and authors’ calculations.
Merchandise exports fall by about 0.7 percentage point of Wisconsin’s GDP in 2Q22 (real U.S. exports rise in 2Q22-3Q22). If the multiplier is about 1.6, this accounts for about 1.1 percentage points of GDP decline. The estimate assumes that all value added to exports comes from Wisconsin, which is not the case. Combined with the fact that manufacturing value added (a typical proxy for tradable goods) suggests that Wisconsin’s underperformance is partly related to exports.
