Wisconsin’s economy had one of the sharpest rebounds in the country during the third quarter of 2020, but it still needs to make up for almost two years of lost economic growth, according to data from the U.S. Bureau of Economic Analysis.
Real gross domestic product for the state grew at a 40.3% annualized rate from the second quarter to the third, a rate that ranks ninth in the country.
The U.S. economy as a whole grew at a 33.4% rate from the second to third quarter.
Among surrounding states, Michigan and Indiana had better recoveries than Wisconsin, up 44.2% and 43.3% respectively. Iowa, Minnesota and Illinois were also among the top half of states, up between 36.4% and 34.5%.
The biggest driver of the recovery was Wisconsin’s manufacturing sector, which contributed 10.6 percentage points to growth. Within that figure, durable goods manufacturing added 7.6 percentage points while nondurable goods added 3 points. The state had the fourth strongest contribution from manufacturing in the country.
But the impressive third quarter growth rate, of course, is largely a rebound from the hard hit the economy took in the second quarter. During that period, Wisconsin’s economy shrank at a 32.6% annualized rate, ranking 35th in the country.
Put another way, Wisconsin's real GDP, which accounts for inflation, dropped to about the same point it was at in early 2013 during the second quarter and rebounded to roughly the same levels as late 2017 or early 2018 during the third quarter.
That leaves the state with nearly two full years of economic growth to recover before reaching its pre-pandemic peak from the fourth quarter of 2019.
In the last year, Wisconsin’s real GDP dropped at a 2.9% compound annual growth rate, ranking 26th in the country. Only three states – Utah, Washington and Idaho – have grown over the same period.
Wisconsin’s manufacturing sector contracted at a 1.6% rate from the third quarter of 2019 to Q3 2020, which ranks 32nd in the country. The industry, which accounts for around 19% of the state’s economy, shrunk to around 2010 or 2011 levels in the second quarter before rebounding in the third quarter to mid-2018 levels.
Harder hit was Wisconsin’s accommodation and food service sector, which essentially saw its economic output cut from $6.7 billion in 2012 dollars at the end of 2019 to $3.6 billion in the second quarter. It rebounded to $5.3 billion in the third quarter. Despite that improvement, the sector is currently at the same level it was at in 1998. It shrank at a 21.6% rate from Q3 2019 to the third quarter this year, the 10th worst drop in the country.