When Drs. Nick Jolly and Grace Wang were deciding how to formulate their new scorecard for the Milwaukee metro area’s economy, they had one purpose in mind: help local businesses make better decisions.
“I would love to have this report be useful to anyone who cares about the economic health and the economic future of our community here in southeast Wisconsin,” says Wang, professor of economics in Marquette Business.
That need led the Economics Department to create a comprehensive report that describes the state of Milwaukee’s economy and predicts its near-term future. Aided by several graduate students, Wang and Jolly incorporated into their model data on unemployment, wage trends, housing prices and sectoral employment, among other key economic indicators.
It’s a change from anything that either professor has done in the past.
“This is not an academic paper,” Jolly says. “If you publish in a peer-reviewed journal, the writing style is very different. We have to use academically rigorous methods to build this economic forecast but focus more on interpretation of the end results.”
Those results have been largely positive over the past few years. Ever since the business drop-offs that accompanied the COVID pandemic abated, employment numbers have grown at a faster rate than they did prior to the pandemic. Average hourly earnings have also risen more quickly than they did prior to COVID. Those two trends have helped keep consumer purchasing power strong amid rising inflation.
We’re hopeful that as more data becomes available, our projections will become even more precise.
Dr. Grace Wang, Professor of Economics
However, not every trend has been positive. Housing prices have increased dramatically since COVID, making the area less affordable for renters and other non-homeowners.
“We’ll have to track the data closely to see how these factors influence the way consumers decide to spend their money,” Wang says.
Overall, though, Wisconsin is in strong economic shape when compared to the larger American economy. Total state income is growing at a faster rate than is the national Gross Domestic Product, and unemployment rate in both Wisconsin and the Milwaukee metro area is below the national rate.
The graduate students helping to assemble this report are part of the Master of Science in Applied Economics program, which provides instruction in the advanced quantitative techniques needed by professional analysts. The program is built around applied learning experiences that give students the opportunity to work with data in ways that help solve real-world problems. For instance, MSAE students have come up with solutions to optimize Habitat for Humanity’s volunteer recruitment efforts and researched the impact of layoffs on employees’ chances of being rehired.
MSAE students Lisa Gandolfi, Thomas Dierbach and Eva Beeth played essential roles in developing the model behind the forecast.
“This project has been very rewarding as a learner and has definitely introduced me to the possibilities that go along with data analytics,” Beeth says. “After working with Nick and Grace, I have learned how to manage these large data sets and then transform them into an actionable story that can be given to different audiences to help them.”
Wang and Jolly will collaborate with graduate students to update the economic forecast once per semester. Over time, these reports will create a log of Wisconsin economic trends, showing patterns in the state’s key indicators.
The group’s first forecast was incredibly precise when compared to the real numbers for the month of April, coming within 0.1% of reported total non-farm payroll and within 0.25% of reported retail employment. Average hourly earnings projections differed by only 1.28% from April’s real figures.
“While I would love for people to make decisions based on this report, we also know that nobody can give a perfect forecast of what will happen in the future. With that said, our statistical models have performed quite well so far, and we’re hopeful that as more data becomes available, our projections will become even more precise,” Wang says.
The scorecard extends Marquette’s proud tradition of economic thought leadership, which includes public events, such as the Marburg Economics Lecture, that bring leading economists from around the country to campus. An annual Women in Economics luncheon celebrates alumnae in the profession.
As Marquette educates the economists of tomorrow, it taps into student and faculty talent to create tools that help the public. It’s an experience that Beeth found to be meaningful.
“Creating this economic scorecard has been one of the highlights of my time in the MSAE program,” Beeth says.
