Latest: February 26, 2016
Minnesota’s economy has felt the adverse effects of falling commodity prices, the stronger US dollar, and weak global growth. A sharp drop in global iron ore prices has led to significant cutbacks in the state’s important mining sector. Agricultural and manufacturing activity has also struggled. Ample supplies, a strong U.S. dollar, and slow growth in global demand have kept prices for corn and soybeans low, hurting the profits of Minnesota farmers. Likewise, the surging value of the dollar against the currencies of Minnesota’s largest trading partners—including Canada and Mexico—has hurt demand for the state’s manufactured exports. As a result, the pace of overall job growth in Minnesota slowed during the second half of 2015.
Nonetheless, Minnesota is weathering the recent global slowdown and slide in commodity prices reasonably well, a reflection of its large and diverse economic base. Job growth has remained widespread, with recent gains in education and health services, retail trade, and financial activities. Improved homebuilding activity has also meant greater need for construction tradespeople like carpenters and roofers. That broad based job growth has helped quickly absorb the underemployed and unemployed, and push down the state’s jobless rate in December to 3.5 percent, its lowest mark since the early 2000s and the lowest among states with a major metropolitan area. With the excess supply of workers rapidly diminishing, a tighter labor market is leading to some long-awaited wage acceleration.
MMB’s February 2016 economic forecast calls for Minnesota’s expansion to continue over the next several years, but at a generally slower pace. It appears that Minnesota is at or near its full employment potential, where job growth is becoming increasingly constrained by the impact of an aging population on the market supply of labor. As a result, both employment and total wage income growth are expected to remain modest in 2016 and 2017, with the average annual wage slowly accelerating throughout much of the forecast horizon. The forecast expects small improvements in household formation, labor force growth, and labor productivity.
Read More :
>> Minnesota Economic Outlook (pdf)
U.S. Economic Outlook
Data Tables :
>> Minnesota Annual Forecast Data (xlsx)
>> U.S. Annual Forecast Data (xlsx)
Note: These economic forecasts were prepared in February 2016, and are based on information available at that time.
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