State employment growth is projected to continue slowing this year before flattening from 2025 to 2027 while personal income is set to grow, according to a new Department of Revenue economic forecast.
After posting employment growth of 2.8% in 2022, Wisconsin had 1.4% growth last year and is expected to see 0.8% growth this year, the report shows. That follows the trend for national employment growth, which has fallen from 4.3% in 2022 to 2.3% in 2023 and 1.4% this year.
“This trajectory is expected to continue until 2025, helping to bring the inflation rate down to 2%,” report authors wrote, adding the forecast projects flat growth for the next several years both in Wisconsin and nationwide.
As of last year, all of the state’s employment growth came from the private sector as government jobs were below their level from 2020. Private employment in Wisconsin rose 1.3% last year led by leisure and hospitality with 4.7% growth, construction with 3.5% and education and health services, 2.4%.
“These same sectors are expected to continue driving most of the growth, while the current two largest sectors, manufacturing and trade, transportation, and utilities, are expected to lose jobs in the coming years,” authors wrote.
Meanwhile, nominal personal income in Wisconsin is expected to grow 4.3% this year and next year, driven in large part by growth in wages and salaries and supplemental pay. Adjusted for inflation, real personal income is projected to have grown 0.6% last year after declining 3.3% in 2022. DOR says real personal income is expected to grow 1.7% this year as inflation keeps slowing, before rising 2.5% next year and 2.3% in 2026.
The report notes inflation is projected to “slow sustainably” as labor markets ease, reaching the 2% target rate by 2027.
“The Fed will start cutting interest rates well before that,” report authors wrote. “The August S&P Global forecast includes the first rate cut in December, but data released after the forecast points to a likely rate cut in September.”
In the second quarter of this year, state unemployment was 3%, staying below the U.S. rate of 4%. Wisconsin’s rate is expected to peak at 3.6% in 2027 as the national rate hits 4.6%.
See the report.
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