Wisconsin could lose 50,000 nonfarm jobs in 2019, a potential 1.67 percent drop in employment that would be the largest year-over-year decline since early 2010, according to a forecast from two economists at the University of Wisconsin-Madison
Junjie Guo and Noah Williams of the Center for Research on the Wisconsin Economy released their 2019 economic forecast Tuesday. They are predicting Wisconsin’s GDP will grow 2.4 percent but the unemployment rate will rise to 4.2 percent and the labor force will decline by 1 percent.
Nationally, the duo forecast GDP growth of about 1.4 percent with the unemployment rate rising to 4.2 percent.
“We’re predicting a fairly large slowdown nationally and so we see that reverberating throughout the state,” said Williams, director of the Center for Research on the Wisconsin Economy.
He added the forecast model is based on historical trends and available data. The only judgment the authors incorporate is a prediction for the Federal Reserve’s actions on interest rates in the next few months.
The authors write that there is a heightened recession risk but their median forecast suggests growth will slow “to levels which have been more prevalent during the recovery.”
Wisconsin’s total nonfarm payroll increased around 22,000 in 2016 and 2017 and as of November employment was up 43,800 from the same time in 2017. A drop of 50,000 jobs by November 2019 would represent a 1.67 percent decline.
Guo and Williams predicted the addition of 39,300 jobs in 2018 when they made their forecast last year. In absolute terms, their 2018 forecast for Wisconsin was off by an average of 4.2 percent across 13 variables.
Williams pointed out that even if Wisconsin’s unemployment rate rises above 4 percent, it would still be at a healthy level. He added “relative to where we’ve been, it is certainly a substantial slowdown.”
Guo and Williams predict output from the state’s manufacturing sector will grow about 6 percent, slightly higher than recent years but following a trend that started in mid-2017. They do predict employment in Wisconsin manufacturing will decline but wages for production employees will increase.
Wisconsin’s housing market will see some slowdown, according to the forecast. The number of building permits is excepted to decline slightly while the all-transactions housing price index will increase between 3 and 6 percent. The index was around 6 percent in 2018.
The forecast fits with other economic data points released in recent weeks. Wisconsin saw the second-largest slowdown in wage growth in the country during October and November. The Marquette-ISM Report on Manufacturing registered its lowest level in two years in December.
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