A version of this article by Menzie Chinn was originally published in the Milwaukee Journal Sentinel Ideas Lab.
Although you may not know it from the doom-and-gloom headlines that continue to dominate media and social media conversations, we have made considerable progress in reducing inflation nationwide. This comes as economic activity has remained strong. From mid-2022, Inflation has fallen from 9% to 3.5% in March 2024, while unemployment has barely budged, rising from 3.6% to 3.8%. In the Midwest region encompassing Wisconsin (along with Illinois, Indiana, Michigan, Ohio), the decline was even more dramatic, with inflation declining from a peak 9.8% to 2.6%, while Wisconsin unemployment stayed essentially constant, at 3% by March of this year.
Despite these relatively positive developments, the mood remains somewhat lackluster for Wisconsinites, as for the nation. First, the issue that has preoccupied people over the past two years – inflation. At the La Follette School of Public Affairs at the University of Wisconsin-Madison, we have been exploring various topics that are on the minds of Wisconsin residents through our 2024 Main Street Agenda project. Unsurprisingly, inflation ranks as the top concern, with 63% of the respondents in the new WisconSays/La Follette survey believing it is quite a problem or an extremely big problem. Furthermore, the survey – taken in summer/fall 2023 – indicates that inflation was perceived as particularly difficult for households most financially challenged: 72% of those “financially much worse off” considered inflation in Wisconsin “an extremely big problem.”
While inflation in the Midwest was slightly slower than nationwide, since January 2021 prices for groceries have actually risen slightly faster in the state: 4.2% vs. 1.7%.
This might explain why 50% of those who classify themselves as food insecure characterize inflation as a “an extremely big problem”. And while inflation generally has abated, there is some evidence that consumers feel increases in inflation more than decreases. This might reflect that consumers really dislike the elevated price level, particularly after the last decades of relatively low inflation.
As for economic activity more generally, Wisconsin is doing fairly well by most counts. Employment growth continues apace, and while employment has not reattained the pre-pandemic trend, the shortfall is the same as that prevailing for the national economy. This view is reflected in the WisconSays/La Follette Survey, where only 34% of Wisconsinites view the economy as quite a problem or an extremely big problem, as opposed to 57% when discussing the national economy.
While inflation has eroded spending power, incomes in the state have risen as well. Total Wisconsin wages and salaries after adjusting for inflation have risen 3.6% since the first quarter of 2021. Moreover, most key indicators – GDP, employment, inflation adjusted personal income – have been rising since mid-2023.
This doesn’t mean that all individuals are feeling the benefits of a strong Wisconsin economy. The WisconSays/La Follette Survey highlights the fact that 43-45% of those with household incomes below $50 thousand consider the economy, however they define it, either quite a problem or an extremely large problem. This share contrasts with 25% for those who earn $125 thousand or more per year. The perceived fortunes of Wisconsinites also vary by demographic variables, particularly by education. 42% of those sampled with high school or less education viewed the economy as quite a problem or an extremely large problem. Only 26% of those with some college or above had a similar perception. On its face, this makes perfect sense. However, one caveat is that lower-wage employees in Wisconsin have actually experienced faster increases in hourly earnings when adjusted for inflation over the last few years. In the absence of this outcome, the lower-income households might have had an even gloomier view.
In other words, while those who are most financially stressed view the economy the most pessimistically, in general, those who receive the lowest wages have gained disproportionately in inflation-adjusted wages.
One interesting result of the WisconSays/La Follette Survey is that there appears to be no partisan divide with respect to the perception of the economic conditions facing the state. This contrasts with the well-documented divide at the national level, where Republican and Republican-leaning respondents view the economy about half as favorably as Democrat and lean-Democrat respondents. This perhaps again speaks to the overall strength of the state’s economy.
As for future prospects, the Wisconsin economy typically follows the nation’s. With the outlook brightening at the national level, the Wisconsin Department of Revenue’s latest forecast released in March projects continued employment (albeit decelerating) growth, as well as increases in real personal income and GDP growth. Whatever the upcoming headlines may or may not say, the state’s economy remains strong and is trending in a direction that nearly every Wisconsinite can get behind.
What matters to Wisconsin
The La Follette School of Public Affairs and the Milwaukee Journal Sentinel are collaborating to share insights on how Wisconsinites feel about important policy topics through a yearlong project called the Main Street Agenda. Each month, the La Follette School and the Milwaukee Journal Sentinel will feature a different policy topic, analyzing new statewide survey data to highlight what matters to Wisconsin. The WisconSays/La Follette Survey being used for the Main Street Agenda is a subset of the new WisconSays opinion panel based out of the UW-Madison Survey Center. There are more than 3,500 Wisconsinites enrolled in this representative panel.