TUE AM News: UW-Extension report spotlights various measures of inflation; Fiscal year-to-date sales tax revenue up 12.2 percent, report shows

— A recent analysis from UW-Extension’s economic development division finds five different measures of inflation all show rising prices. 

“This suggests that the underlying inflationary pressures are not due to the unique way in which the [consumer price index] for all items is calculated,” report authors wrote. “Even with energy and food removed, the CPI and [personal consumption expenditures] price indices are increasing.” 

The report, part of the Wisconsin IDEA series, highlights various factors driving the current high inflation rates. These include: the pandemic shutdowns of the economy disrupting supply chains and causing “demand to outstrip supply;” federal stimulus policies feeding higher levels of pent-up demand; and businesses previously cutting back on services and packaging sizes through a strategy of “shrinkflation” to keep prices lower. 

“For example, rather than raise the price of coffee, firms went from twelve to ten [ounce] packages while retaining the same price,” they wrote. “With higher rates of inflation, some firms see opportunities to raise depressed prices.” 

Report authors highlight a “debate” among economists of the best measure for tracking inflation, noting some question if the consumer price index overstates or understates inflation. For example, since CPI is based on a set of consumer goods and services, some economists note it doesn’t capture the prices paid by businesses. 

Other metrics included in the report include: the Gross Domestic Price Deflator, measuring the aggregate prices of all U.S. goods and services; and the Personal Consumption Expenditures Price Index, covering more expenditures than the CPI. 

By combining all of these metrics, including variations of the CPI and PCE excluding food and energy, the report illustrates how prices are increasing across a wide range of goods and services amid the current period of inflation. 

Still, the report also notes the current rate of inflation is “not above some historic highs,” pointing to the early 1970s and 1980s. 

The report was authored by Steven Deller, a professor in agricultural and applied economics, and Brandon Hofstedt, Community Economic Development program manager within the Community Development Institute.  

See the report: 

— The latest Department of Revenue report shows sales tax revenues for the current fiscal year are 12.2 percent higher over the year. 

General sales and use tax revenue for the period covering mid-July 2021 to the end of March 2022 was nearly $4.5 billion, compared to just under $4 billion for the same period of fiscal year 2021, the report shows. 

But Emily Camfield, an economist with DOR, explained in a recent interview that inflation is impacting these figures. 

“These are nominal values, and considering that inflation is running at around 8.5 percent, that doesn’t show for particularly strong real growth; that’s closer to around 4 percent,” she said. “But as for sales, I would say that they’re coming in pretty much exactly as we had expected.” 

Still, she said the revenue growth is “stronger than we’ve seen” in the past decade or so. 

“These are coming off of depressed levels just because things had fallen so much over the year or two just because of the recession from the coronavirus,” she said. 

Meanwhile, corporate tax revenues are 12.3 percent higher over the same timeframe, reaching nearly $1.9 billion in the latest report. 

“Corporate tax revenues have been running very strong for several years now, and this is kind of a continuation of that,” she said. “And it’s not unique to Wisconsin. We see that corporate tax revenues are up across the nation, at the federal level and then as well as other states.” 

See the DOR release: https://www.revenue.wi.gov/Pages/News/2022/March-FY2022-Collections.pdf 

— A team of UW-Madison engineers is among the top 60 groups selected for the XPRIZE Carbon Removal competition. 

The $100 million global competition, funded by entrepreneur Elon Musk and the Musk Foundation, is seeking methods for removing carbon dioxide from the atmosphere in hopes of fighting climate change.  There were more than 500 entries.

The Madison-based team, called Earth RepAIR, is developing a method for blowing air over a solution of hydroxide to capture airborne carbon. By combining the resulting solution with coal ash, the carbon dioxide is converted into fine limestone and other particles, which can be repurposed as a component of cement, a release from the university shows. 

The reaction creates more hydroxide as a byproduct. That can be recycled through the same system to capture more carbon dioxide.

This system relies on ideas from Bu Wang, an assistant professor of civil and environmental engineering in the College of Engineering, and Rob Anex, a professor of biological systems engineering in the College of Agricultural and Life Sciences. A number of undergraduate and graduate students are also involved. 

Anex, a researcher with the university’s Wisconsin Energy Institute, says the team aims to “build a 1,000-ton-per-year plant that will be running by hopefully the middle of 2023.” 

To qualify for the latest stage of the competition, teams were asked to demonstrate their idea, estimate costs to implement it, and develop a plan for scaling up and implementing their system on a large scale. 

By making it into the top 60, the Earth RepAIR team will get support from the competition including legal, business development and investments services, the release shows. The team previously received a $250,000 award in fall 2021. 

See competition details here: https://www.xprize.org/ 

See the release: https://www.wispolitics.com/2022/uw-madison-ultra-efficient-carbon-capture-tech-earns-top-60-spot-in-global-xprize-challenge/

— State officials recently met with representatives of the Menominee Tribe of Wisconsin to highlight the use of solar power at the Menominee Department of Transit Services. 

Last week’s visit, led by Wisconsin Department of Administration Secretary-designee Kathy Blumenfeld, came on the heels of Gov. Tony Evers announcing the state’s Clean Energy Plan. 

“Strong partnerships with the Tribal Nations are a key part of Governor Evers’ efforts to make sure that Wisconsin’s economy works for everyone, and that our businesses and communities continue to bounce back, with an eye towards a clean energy future,” Blumenfeld said in a release. 

See the release: https://www.wispolitics.com/2022/department-of-administration-menominee-tribal-visit-highlights-clean-energy-commitment/ 

See more environmental news at the WisPolitics.com Earth Day page: https://www.wispolitics.com/2022/earth-day-events-news-and-history/ 

— Madison has been ranked 19th among the best large U.S. cities for starting a business by WalletHub, a personal finance website. 

Milwaukee also made the cut, ranked at 72nd among the 100 cities included in the analysis. 

While Madison got an average rating for its business environment and business costs, it was ranked 4th overall for access to resources. By comparison, Milwaukee had a better rating for business costs at 26th for this metric. 

The rankings included a number of factors such as labor costs, availability of venture capital, five-year business survival rate, startups per capita, average work week length, education levels, vaccination rates and others. 

See the full report: https://wallethub.com/edu/best-cities-to-start-a-business/2281 

— A new program is training rural health workers to recognize signs of substance abuse and provide informed treatment. 

The Wisconsin Rural Health & Substance Use Clinical Support program, or RHeSUS, is an effort of the Wisconsin Hospital Association and the UW School of Medicine and Public Health. It launched this month with support from a $1 million community action grant from the Wisconsin Partnership Program, a three-pronged effort of the UW SMPH aimed at research, education and community partnerships. 

Dr. Randall Brown, a professor of family medicine and community health with UW SMPH, says “the need is as great as it’s ever been” for addiction treatment services. Rates of alcohol, opioid and other drug abuse became “dramatically worse” in Wisconsin during the pandemic, he said in remarks provided by UW Health. 

The number of reported overdose deaths in Wisconsin increased by about 14 percent between November 2020 and November 2021, federal figures show. And a Department of Health Services report last year found the state experienced more suspected opioid overdoses during the pandemic, based on ambulance activity and emergency department visits. 

Brown said most people associate addiction treatment with specialized facilities, intensive out-patient counseling and residential treatment centers. But these services aren’t always available, particularly in areas with high demand. He explained a number of substance-related issues can be effectively managed in primary care settings or at emergency departments. 

“But a lot of times, health care providers have gone through their medical and residency training and really haven’t had a lot of exposure to the education and modeling that they need to feel comfortable in dealing with those issues,” Brown said. 

The program will leverage WHA’s statewide reach to address this lack of exposure through training, clinic-level consultations and other efforts. Wisconsin Voices for Recovery will also work with the RHeSUS program to expand an emergency department peer recovery coaching program called ED2Recovery+. 

“I think we could expect to see improvements even within the first year … on some measures around provider comfort and provider competence in managing some of these issues,” he said. 

See the release: https://www.wispolitics.com/2022/uw-madison-new-program-to-expand-access-to-substance-abuse-treatment-in-rural-wi/ 

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