Current Economic Analysis

Events

CROWE Events and Outreach July 2021 - Dec 2021

Date Event Speaker(s) Presentation Title/Topic Presentation materials and Links
Sept 30 WCCE Annual Conference & Retreat September 28-30 Prof Noah Williams Wisconsin Economic Update
Sept 22 4th Annual Economic Update Prof Noah Williams Wisconsin’s Economy Today
Aug 10 The UW Now Livestream and Q & A
Mike Stohler
moderated by Mike Knetter
Outlook for the U.S. Labor Market Watch video View Prof Williams' slides

Events from Jan 2021 – June 2021 are posted here

In the Media

Sept 10: CROWE report cited in Empower Wisconsin: Relief coming for employers hit hard by Evers’ failure to act
Sept 9: CROWE report cited in Forbes: Unemployment Bonuses Slowed Labor Market Recovery
Sept 7: Prof Williams quoted in Wisbusiness newsletter
Sept 5: Wisconsin State Journal article
Enhanced unemployment benefits ending, but workforce challenges expected to persist quotes Prof Williams’ City Journal article
Sept 3: Prof Williams writes a commentary about today’s job report for Manhattan Institute
Sept 1: Mercatus Center’s Policy Brief cites Prof Williams’ work
Sept 1: Yahoo news quotes Prof Williams’ City Journal article
Aug 26: Opinion piece in Washington Examiner: Shocking study: People work less when you pay them not to work on Prof Williams’ recent City Journal article

Aug 26: CROWE report cited in Green Bay Press Gazette: Ending expanded unemployment benefits may raise employment levels
Aug 24: Article by Prof Williams in City Journal:
The Results of the Labor-Market Experiment Are In
Aug 8: Prof Williams quoted in Kenosha News’ Top Story on Post Pandemic Employment: Worker shortage likely to continue, long-term trends seen as likely in play as well
Aug 6: Prof Williams quoted in MarketWatch: ‘It’s been a while since we’ve had this many vacancies’: Education is one category where the July jobs report still gets a tough grade
Aug 6: Prof Williams quoted in The Bond Buyer: Muni benchmarks rise, but outperform the jump in UST yields
Aug 1: Prof Williams interviewed on Channel3000: Prof Williams discussed his recent report about ending the extra federal unemployment benefit early.  Watch on Youtube


July 30: Prof Williams quoted in The Dispatch: U.S. Economy Back to Sea Level
July 29: CROWE report cited in Empower Wisconsin: Evers fails to address unemployment fraud concerns
July 27: Prof Williams quoted on CNBC: Wages are rising, but inflation may have given workers a 2% pay cut
July 22: Prof Williams interviewed and quoted on NBC15: Housing assistance bill introduced: How it may address labor supply strain
July 15: Prof Williams interviewed and quoted on CBS 58: Wisconsin’s unemployment rate remains stagnant as debate over labor shortage continues
July 3: Politifact: “40% of jobs in this country pay less than the average unemployment check of $750/week.” Espaillat’s claim has some truth to it, though average benefits likely lower
July 2: Commentary by Prof Williams: MI Responds: June 2021 Jobs Report


Media mentions from Jan 2021 – June 2021 are posted here

Recent CROWE Data briefs: Quick Reads

August 20, 2021

More Early Evidence on the End of Expanded Federal Unemployment Benefits

Summary
Beginning in May a number of states announced that they would be ending participation in the federal enhanced and expanded unemployment benefit programs instituted during the COVID-19 pandemic. In total, 26 states decided to end their participation in these programs before their scheduled expiration in September. This note uses data from the Bureau of Labor Statistics monthly household and payroll employment surveys, which now includes data through July. Due to this data limitation, I focus on the 22 states that ended federal benefits in June.

Most of these states announced the end of the enhanced federal unemployment benefits at least one month prior to their expiration, with the earliest announcements starting in mid-May. Since the reference week for the BLS surveys is the calendar week including the 12th of the month, I take the May survey as the baseline. Grouping the states into those terminating benefits in June and the rest of the US, I then compare the growth rates of various employment indicators over the two months following May to that of the preceding two months.

While caution should be exercised given the very short data sample, the results suggest that ending enhanced benefits had a positive impact on the labor market. Across all indicators I find that the terminating states experienced improved labor market outcomes relative to the rest of the US. Employment growth accelerated by more in these states in both the household and payroll surveys, and the labor force grew more rapidly. The relative gains in private employment were even more than total employment, and employment growth in the leisure and hospitality sector was especially strong in the terminating states. This is notable since this sector was hit hard by the COVID-19 pandemic recession, and due to its low average wages, was likely most affected by disincentive effects of the enhanced unemployment benefits.

Read the full data brief

Table 1: Growth rates in the two months before and after the first announcements of the end of the federal enhanced unemployment benefits, along with the differences, and difference in differences.

Mar-May Growth May-Jul Growth Difference Diff in Diff
Household: Employment
Terminating
Rest of US
0.11
0.39
0.61
0.39
0.50
0.00
0.49
Household: Unemployment
Terminating
Rest of US
-2.04
-6.08
-1.35
-2.80
0.69
3.28
-2.59
Household: Labor Force
Terminating
Rest of US
0.00
-0.05
0.51
0.19
0.51
0.24
0.27
Employment: Total
Terminating
Rest of US
0.17
0.52
1.13
1.10
0.95
0.57
0.38
Employment: Private
Terminating
Rest of US
0.18
0.59
1.15
0.95
0.97
0.36
0.61
Employment: Leisure and Hospitality
Terminating
Rest of US
1.60
3.96
3.80
4.34
2.20
0.38
1.81
Employment : Retail Trade
Terminating
Rest of US
-0.28
-0.19
0.61
0.29
0.89
0.48
0.41
Leisure and hospitality employment during 2021 in the states terminating enhanced federal benefits in June. Indexed so March 2021=100. Also shown is the level if the March-May growth rate had continued.

July 30, 2021

Early Evidence on the End of Expanded Federal Unemployment Benefits

Summary
Beginning in May a number of states announced that they would be ending participation in the federal enhanced and expanded unemployment benefit programs instituted during the COVID-19 pandemic. In total, 26 states decided to end their participation in these programs before their scheduled expiration in September. Due to limited data, this report focuses on the first four states that ended benefits on June 12, and the additional eight states that ended them on June 19.

Data on continued claims, counting the total number of workers claiming unemployment benefits on the regular state unemployment insurance programs, is available through July 17, four or five weeks after expiration of the enhanced benefits in these states. I find that the first four states experienced a substantial drop of 26.3% in continued unemployment claims since June 5, the next eight states saw a decline of 15.1%, and the rest of the US dropped only 0.1%. Moreover, Alabama (in the group of eight) had an anomalous spike in benefits the week after expiration, which has since faded. Excluding Alabama, the other seven states in the second group saw a 21.3% drop. Since the week ending May 8, the week before program most of the terminations were announced, the first four states saw a 31.4% drop in continued claims, the next eight had a decline of 27.3% (31.3% excluding Alabama), and the rest of the US dropped by 10.2%.

Initial results suggest that the announcement and expiration of expanded unemployment benefits were accompanied by a decline in initial unemployment claims, followed by a decline in continued claims. Thus, in addition to the direct impact of reducing unemployed claimants on the enhanced and extended federal benefits programs, the terminations also reduced the number of unemployed workers filing for the regular state unemployment insurance programs, whose effective benefits were cut but whose eligibility was unaffected.

Read the full Data brief

Continued unemployment claims in the states ending unemployment benefits on June
12 (red) and June 19 (blue) along with the rest of the United States (black). Indexed so May 8,
2021 = 100. The vertical line in the right panel is May 8, the week before the terminations were
announced.

September 16, 2021

Wisconsin’s economy: September 2021

This brief reviews several indicators of the Wisconsin economy.

Employment: The labor market is stable. Initial unemployment claims have remained mostly unchanged

since last month and stand about 82 percent above their 2019 levels for the first week of September. August’s payroll employment is 110,600 workers below its August, 2019 level, which is a small deterioration from July. The August, 2021 state unemployment rate stands at 3.9 percent (compared to 3.9 percent in July). In the July data, Wisconsin has the 14th-lowest unemployment rate among U.S. states. Among Wisconsin metropolitan areas, La Crosse has the lowest unemployment rate (3.0 percent) and Racine the highest (5.2 percent).

Retail trade: Total retail trade growth in Wisconsin has returned to pre-pandemic levels. The strong growth in the gasoline and building supply retail sectors has subsided in May.

Inflation: Midwest-region inflation rates have declined from their highs in June, but remain elevated at 6.4 percent (year over year) in August, 2021. Inflation is positive in all sectors of the economy, at levels similar to those in early 2020. Transportation prices, which include motor fuel, are the outlier, having risen sharply in 2021, but inflation in the sector is beginning to ease.

Share prices: The index of publicly-traded firms headquartered in Wisconsin had caught up to the S&P 500 in early 2021, after lagging the major index for all of 2020. Beginning in May 2021, the Wisconsin index has fallen behind the S&P 500 and remains below the benchmark index.

Read the full Data Brief

Fig 1: Weekly initial unemployment claims in Wisconsin
Fig 3: Measures of job loss in Wisconsin (relative to 2019)
Fig 5: Retail sales in Wisconsin
Fig 7: Components of Midwest-region inflation
Fig 2: Unemployment rates in Wisconsin
Fig 4: Retail sales in Wisconsin
Fig 6: Inflation in the Midwest
Fig 8: Equity prices of public firms headquartered in Wisconsin

Updated: August 12, 2021 (First posted: Feb 18, 2021)

Job Openings and Labor Market Tightness During the COVID-19 Pandemic

Abstract

In March and April of 2020 and for both the U.S. and Wisconsin, the number of job openings per capita dropped by more than 20%, the weekly number of new online job postings dropped by over 30%, and the number of job openings per unemployed worker, a standard measure of labor market tightness, dropped by over 70%. Although there were some fluctuations, all three measures have been recovering since then, especially in the summer of 2020 and in the first few months of 2021.

However, with the recent surge in COVID cases due to the Delta variant, the latest data suggest the number of new online job postings dropped significantly in June before becoming roughly flat at a lower level in July and early August. For the U.S., the average number of new online job postings in the four weeks ending 8/6/2021 is about 7% below the average in the four weeks ending 6/4/2021. The corresponding number for Wisconsin is 16%. There is also a slight increase in the level of unemployment from May to June in both the U.S. and Wisconsin. Together, the decline in job postings and the increase in unemployment imply the labor market is less tight now than it was two months ago.

Read the Full Data Brief

Changes in New Online Job Postings (vertical axis, from Burning Glass Technologies) and Job Openings (horizontal axis, from the Bureau of Labor Statistics) from May to July by State
New Online Job Postings by Sector in Wisconsin

July 28, 2021

Employment Effects of Ending of Expanded Federal Unemployment Benefits

Summary

Beginning in May a number of states announced that they would be ending participation in the federal enhanced and expanded unemployment insurance (UI) benefit programs instituted during the COVID-19 pandemic. In this brief, I focus on the first 12 of these: the four states who ended benefits on June 12, and the additional eight states ending on June 19. I use private data from Homebase, which provides daily employment records for a sample of mostly small businesses with hourly workers, largely concentrated in accommodation and food services. This sample was hit hard by the COVID-19 pandemic recession, and due to its lower average wages, would likely be most affected by disincentive effects of the enhanced UI benefits.

I find a notable, but modest, employment impact of the enhanced unemployment benefit termination. Shortly after the states announced they would be ending the federal UI enhancements in mid-May, employment in the terminating states began increasing relative to the rest of the United States. Two weeks after the announcements, employment among these lower wage hourly workers increased by about 1.5% on average in the terminating states relative to the rest of the US. After this two week adjustment period, the employment gap was relatively stable over the rest of the sample, apart from closures for the Independence Day holiday. While employment has continued to recover in this sector across the US, the termination of the enhanced federal unemployment benefits seems to have provided a modest employment boost.

Employment in the first 12 states ending enhanced federal unemployment benefits (red), along with the rest of the United States (black) and the difference between them (right panel). Weekly average data, indexed so May 6, 2021 = 100. The vertical line is May 6, the Thursday before the first terminations were announced.

Read the full data brief

Media Coverage

Channel 3000

July 22, 2021

Current Private Indicators on the Wisconsin Economy: Small Business Employment and Consumer Spending

Summary

I use two private data sources to analyze the labor market and consumer spending in the state of Wisconsin. I first analyze labor market data from a sample of mostly small businesses. With the onset of the COVID-19 pandemic, by midApril 2020 48% of these businesses were closed, with employment down 59%. A sharp recovery followed, which flattened out in the summer, and tailed off in the fall of 2020 with the spike in virus activity. After months of relative stability from November 2020-April 2021, employment has grown sharply over the past three months. Employment has largely returned to pre-pandemic levels, after increasing 18 percentage points since mid-April. While employment has grown, open locations have leveled off, with roughly 1 in 6 small businesses closing permanently since March 2020.

The food and drink sector had a larger 72% employment drop in April 2020, as locations remaining open had minimal staffing. As these establishments reopened, they brought back more workers. However this sector’s recovery stalled earlier and employment suffered a larger decline during fall 2020, which stabilized into 2021. This sector also saw strong growth over the last three months, but employment still remains 13% below pre-pandemic levels. There were also more permanent closures: roughly 1 in 4 food and drink businesses in Wisconsin closed permanently since March 2020.

I also analyze transactions data on consumer spending, which had a sharper and more sustained recovery than the labor market. After plummeting in April 2020, spending in Wisconsin recovered rapidly, with year-over-year gains from May throughout the rest of the year. Consumption was supported by income growth, and changes in consumption patterns cushioned the impact of the pandemic. Consumption has seen strong growth during the spring of 2021, fueled both by recovery from the pandemic and usual cyclical factors. Relative to mid-July 2019, the two-year cumulative growth is 8.2% in Wisconsin and 5.6% nationally.

During the pandemic, consumers shifted away from social spending toward spending at home, but in recent months many of these trends have reversed. Spending on groceries soared while restaurants plummeted during the pandemic. But restaurants have seen strong growth in 2021, with spending now up 30.1% from pre-pandemic levels while grocery spending has cooled but is still up 9.6%. During the pandemic, consumers spent less on events and travel, and more on home goods. But events and travel have seen strong growth in 2021, now surpassing pre-pandemic levels. After spiking early, online spending has remained high (up 28.9%), while in-store have surpassed pre-pandemic levels (up 21.9% and 8.7% above 2019 levels) after a sharp fall in the pandemic. Recent weeks have seen a return of in-store sales and a cooling of online activity as virus activity in the state abated and remaining health restrictions have eased.

Read the full Data Brief

Total spending in Wisconsin and the rest of the United States, indexed levels
Total spending on events & attractions (red line), travel & transportation (blue line), and home goods (black line) in Wisconsin, indexed levels.
Total spending online (red line) and in-store (black line) in Wisconsin, indexed levels.
Changes in employees working, locations open, and hours worked at small businesses in Wisconsin. 7-day averages of daily data

Updated Sep 3, 2021 (First posted Feb 26, 2021)

Business Formation and Employment Dynamics During the COVID-19 Pandemic

Abstract

This update includes a summary of the most recent weeks of applications for Employer Identification Numbers (EINs) in Wisconsin and five additional Midwestern states. Two trends have emerged more clearly since our July 30, 2021 update: (1) Weekly business applications have been gradually declining since early April, not just in Wisconsin, but across the Midwest and the nation. (2) The flow of applications in the second semester of 2021 so far is significantly lower than in 2021. Together, these two trends suggest that the forces behind the surge in business applications during the COVID-19 pandemic may be losing some steam.

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Weekly applications for Employer Identification Numbers (EINs) fall below one-year-before levels for first time in third quarter of 2021.
Weekly applications for Employer Identification Numbers (EINs) fall below one-year-before levels for first time in third quarter of 2021.