Periodically we will present commentaries on topics of interest to community and economic developers across rural Minnesota. Below is a list of all commentaries with the most recent listed first.
Spring is a Time for Optimism
It sure felt like spring was in the air when the February jobs report was released showing an increase of 227,000 jobs. While that was a bit higher than most analysts expected, what actually was most impressive was that February was the third consecutive month in which the economy created over 200,000 jobs. As any statistician will tell you, one occurrence is often perceived as an episode; two back-to-back occurrences give you a reason to pause and observe; however three consecutive occurrences is categorized as a trend. And while this continuing upward trend in jobs is not that steep, it appears to be spreading a great deal of optimism.
What was equally exciting to see was that in addition to the higher than expected job growth in February, the economy simultaneously witnessed an increase in the employment participation rate. In other words, people who had previously been sitting on the sidelines unable to find a job in the past are now encouraged to once again join the workforce and start looking. The fact that several hundred thousand Americans re-joined the workforce and the overall unemployment rate still remained steady at 8.3 percent is a good sign. And lastly, amid all this optimistic news it was also reported that average weekly wages increased as well. Having all of these indicators trending upward at the same time gives one reasons to hope.
Here in Minnesota the trends and the optimism are equally on display. The January jobs report indicated that our state economy added 15,500 jobs and the state unemployment rate dropped to 5.6 percent; more than 2.5 percentage points lower than the national average. Over the past year the state economy has now added a "net" 29,000 jobs. The strength of the state's private sector was substantial when you take into account the continuing loss in government jobs during the same period of time. For example, in January the private sector actually created 17,200 new jobs, while government shed 1,700 for an overall net gain of 15,500. These contradictory trends have been quite consistent throughout the year with the private sector actually creating close to 37,000 new jobs in the past year, while government agencies shed a total of 7,900 jobs. And while one could argue that the loss of government jobs seems to be slowing down the overall jobs recovery, one cannot deny the fact that in the fourth quarter of 2011 Minnesota's private employers reported close to 50,000 job openings; an increase of 47 percent from the same quarter the year before. Without question Minnesota's private sector is both growing and gaining traction.
The housing market in Minnesota has been weak for years and has created a significant drag on the economy. But now even the housing market seems to be trending in a more positive direction bringing a bit more optimism for 2012. Realtors report that the number of homes receiving offers continues to rise, while the number of new listings entering the market declines. And while the average price of homes has not significantly risen, it is fair to say that the continuing decline in the average price of homes seems to have bottomed out and may be in a position to increase from this point forward.
Locally here in south central Minnesota, the economy actually has been quite robust. While the Mankato/North Mankato metropolitan area typically doesn't receive much statewide attention, some might be surprised to learn that over the past year the Mankato/N. Mankato area has outpaced the all other metro areas in terms of job growth. In fact in the past year jobs grew at a rate of 3.6 percent in the Mankato area. Not that impressed? Well over the same period of time jobs in the Twin Cities metro grew at 1.1 percent; in Rochester the rate was 0.2 percent; and in Duluth net jobs declined by a rate of -0.9 percent. With that as a reference, how does 3.6 percent seem now?
So while the economic recovery continues in Minnesota and across the nation, let's remember that the recovery can't afford any sudden jolts. And while some may imagine jolts such as a natural disaster or unexpected geo-political events, it also includes unwise tax and economic policies designed to speed up the recovery. While it's hard to admit, sometimes the smartest thing a policymaker can do is to sit back and just let the economy continue its course.
Geller is professor & head of the Arts, Humanities & Social Sciences at the University of Minnesota, Crookston. He also serves as the director of the federally-funded EDA Center at UMC. He can be reached at firstname.lastname@example.org