Those banking on Wisconsin’s economy tanking in hopes it might cost Gov. Scott Walker his re-election are not going to like the latest numbers from the Philly Fed.
A new report from the Federal Reserve Bank of Philadelphia is predicting Wisconsin’s economy will grow 3.14 percent on an annualized basis over the next six months, second best among all states.
Only New Hampshire at 3.3 percent had a higher ”leading index” for June, although officials caution the numbers are not meant to compare states but rather predict changes in economic performance going forward. The monthly report forecasts positive economic growth in 38 states over the next six months.
For Wisconsin, the June leading index represents a complete turnaround from April, where the Fed actually predicted the state economy would contract over the next six months. That report was widely circulated among state Democrats as evidence that Walker’s policies were not helping the state economy or leading to job creation.
But improvements in housing starts, manufacturing and unemployment claims since April have Wisconsin on an improved trajectory. The May leading index also showed Wisconsin on the upswing.
"We know that employers want stability and while we can't control all the factors affecting job creation, this ranking is another sign that the work we are doing is improving the business climate in the state," Walker said in a statement Tuesday.
Still, a spokesman for the Philadelphia Fed warned against reading too much into the monthly numbers or using them to compare one state to another.
Released each month, the leading index predicts the six-month growth rate of a state's “coincident index,” a measure designed to reflect economic conditions. The coincident index is calculated by state-level housing starts, initial unemployment insurance claims, manufacturing activity and interest rates.
“Our leading indexes are not meant to be a ‘ranking’ of sorts,” says spokesman Thomas Elliott. “But yes, the numbers are positive for Wisconsin.”
For years, nobody in Wisconsin paid too much attention to the various reports churned out by government economists on a regular basis. But Walker’s vow to create 250,000 new private sector jobs during his first term has put those reports into the spotlight, often prompting debate over the relevance of the figures.
For example, when Wisconsin moved up in the CNBC rankings of Best States for Business in 2012, Walker issued a press release touting the improvement. But when CNBC’s 2013 numbers showed Wisconsin falling several slots, the Walker administration chose to ignore it
UW-Madison economist Menzie Chinn has been tracking a lot of the data on his “Econobrowser” blog. He noted recently that the state Department of Revenue in its latest Economic Outlook predicts Wisconsin will fall about 81,000 jobs short of hitting Walker’s 250,000 jobs target by January 2015.
But even if Walker fails on his job creation promise, some observers say it won’t matter to voters one way or another.
“What this tells me is that people filter the economic news through their own political lens,” UW-Milwaukee political scientist Charles Franklin told me earlier this year.
In a followup email Tuesday, Franklin offered this:
"Current indicators such as employment or wages tell us the path we are on but not where we will end up. By late summer and early fall of 2014 voters will look back on four years and decide if performance has been good enough or disappointing and that judgement will shape votes in November."
"We see that opinion of today's economy strongly influences evaluation of Gov. Walker's performance now, but we don't know how those opinions will change over the next 14 months or so. Also, the skills of candidates play a role in how the public views their economic situation and that too remains to be seen."