Stall Speed in Wisconsin?

The Philadelphia Fed has released leading indicators for December. Essentially zero growth in Wisconsin over the next six months is predicted.

Figure 1 compares the performance of the indicators for Minnesota, Wisconsin, and the Nation, normalized on 2011M01 (when Governors Dayton and Walker took office).

Figure 1: Log coincident indicator for Minnesota (blue), Wisconsin (red), and US (black), all normalized to 2011M01=0. Observations for 2016M06 are based upon December leading indices. Source: Philadelphia Fed coincident indices, leading indices, and author’s calculations.

The leading indicators extend the essentially flat performance over the past few months in Wisconsin. The Philly Fed forecast is slightly more optimistic than the projection from a simple ARIMA(1,1,1) time series model applied to the log coincident index over 1986M01-2015M12.

Figure 2: Coincident indicator for Wisconsin (red), forecast from Philadelphia Fed for 2016M06 (red triangle) are based upon December leading indices, and forecast from ARIMA(1,1,1) time series model (purple) and 90% forecast band. Source: Philadelphia Fed coincident indices, leading indices, and author’s calculations.

Fortunately, the Governor has assured us the state of the State is strong.