Minneapolis Fed outlook brightens a bit

The Federal Bank of Minneapolis was understandably grim at the start of 2010 as it predicted a so-so recovery for the year and, really, a miserable 2010 for Minnesota job growth.

Six months later, the Fed’s newest forecasts offer a little sunshine for the rest of this year and into 2011.

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The bottom line in Minnesota: If you have a job, you should see your income rise. If you’re unemployed, the job market will be better but still won’t be roaring back. If you’re connected to new home construction, hang on tight.

Below are all charts produced by the Minneapolis Fed and released this morning. You can find all the data here. Click on the charts for a larger view.

If you only have a few minutes, try the audio slide show. Either way, if you see something interesting, drop us a line and tell us.

Here’s a look at the Fed’s employment growth predictions:

fed.emplg.gif(“UP” in the charts refers to Michigan’s Upper Peninsula)

Not great, but this is a better outlook than at the start of the year when the Fed was projecting no job growth at all for Minnesota and western Wisconsin in 2010.

The slip of sunlight on employment growth won’t have a big effect on the state’s jobless rate.

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If you are employed, you should see a bigger paycheck. Personal income for Minnesotans is expected to rise the next couple years, although it will still track slower than the nation, according to the Minneapolis Fed.

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Yes, MinnEcon readers, it’s at this point that I’m starting to wonder if my “Fed outlook brightens” headline was too optimistic. But I’ll push ahead.

The Minneapolis Fed delivers a bleak forecast for housing starts, noting that, “In Minnesota and Wisconsin, housing units authorized have not only dropped sharply during the past few years, but they are also below levels observed over 30 years ago.”

The chart shows a tough 2011.

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Said the Fed: “Since forecasting models typically rely on long-term and recent trends, it is not surprising that the model points to a continued drop. At some point, population and market pressures will likely spur a more sustained demand for housing.”

But the Minneapolis Fed, a group with a pretty good track record of economic forecasting, concedes it doesn’t know when the turning point will come.

6/16 UPDATE: Minneapolis Fed economist Rob Grunewald told reporters it will likely be several years before Minnesota recovers all the jobs it lost in the recession.

“At that pace of growth and what out forecast models show going forward, it will still take beyond potentially 2013 to achieve the employment levels seen prior to the recession,” he said.

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Today’s Fed data match up pretty well with the insights of Minnesotans in MPR’s Public Insight Network.

We’ve been asking people to finish the sentence, “I’ll believe the recession’s over when … “

Here’s what folks told us back in February.

Check it out and the you give it a shot: “I’ll believe the recession’s over when…”

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