No states saw their real gross domestic product increase in 2020, but with a 4.5% drop, Wisconsin ranked 37th in the country for GDP growth in the past year, according to data released Friday by the U.S. Bureau of Economic Analysis.Â
The decline is the largest single-year drop in the state’s GDP in data going back to 1963. In 2008, Wisconsin’s GDP declined 1.3% and dropped another 2.8% in 2009. Measured in dollars, 2020’s decline sets the state economy back to about its 2017 level.
Wisconsin also had some of the slowest person income growth in the country, according additional data released earlier this week by the BEA.
Three sectors made significant contributions to the decline in Wisconsin’s GDP.
Predictably, the arts, entertainment, recreation and food service sector contributed a 0.84-percentage-point decline as bars, restaurants and other entertainment operations were forced to close during the pandemic. The accommodation and food service portion of the sector alone accounted for 0.6 points of the decline.
Health care and social assistance also contributed 0.63 percentage points to the decline. Even though portions of the sector remained quite busy caring for COVID-19 patients, hospitals and other providers were forced to delay and postpone other procedures.
The manufacturing sector contributed 0.71 percentage points to the state’s GDP decline. Some companies in the industry were not deemed essential during the pandemic’s initial lockdowns, cutting into their business. Others saw demand for their products shrink or faced supply chain problems induced by the pandemic and shifting consumer habits.
Durable goods manufacturing, in particular, was harder hit, contributing a half-point to the decline. Nondurable goods manufacturing fared better, contributing a little more than two-tenths of decline.
Professional and business services, transportation and warehousing, retail trade and wholesale trade were all drags on Wisconsin’s economy last year.
Just a few sectors provided growth in 2020.
Finance and insurance added 0.12 percentage points to state GDP and utilities added 0.08 points to the cause.
The relative strength of Wisconsin’s GDP growth fluctuated dramatically over the course of the year. Real GDP dropped at an 8.8% annualized rate in the first quarter, which ranked 46th in the country. In the second quarter, GDP was down 32.6%, good enough to rank just 35th in the country.
The third quarter was a bright spot as Wisconsin’s GDP grew at a 40.3% annualized rate as it rebounded from its poor second quarter. The state had the 9th best GDP growth in the country in the third quarter.
In the fourth quarter, however, the state’s GDP grew just 2.8%, compared to 4.3% for the country. Wisconsin ranked 43rd for the quarter in GDP growth.
The state did get a 0.92-point contribution to growth from the manufacturing sector, the 10th best contribution manufacturing provided to any state.
Finance and insurance also provided a 0.93-point boost to growth, the 22nd best contribution from the sector in the country.
Agriculture, -0.89, accommodation and food service, -0.32, utilities, -0.18, and educational services, -0.16, were the biggest drags on the state’s economy for the quarter.
Read the March 8 issue of BizTimes Milwaukee here:
