Our January Membership Meeting was a raging success! Some of you know I’m a closet macro-economist -- I love talking about, learning, and tracking economic trends as shared by experts (ok, fine, true confessions: I love working on these numbers through spreadsheets). I also enjoy sharing and engaging in lively debate about this data.
We were honored to have two economic experts as our guests: Ron Wirtz, Regional Outreach Director for the Federal Reserve Bank of Minneapolis, and Mary Beth Adams, Director at RSM, an audit/tax/consulting firm well known for their work in reporting on economic trends.
Every economist (or wanna-be) has his or her pet indicators to gauge the upcoming economic environment. Ron, Mary Beth and I debated that on stage, which was fun. No matter which data point you like, the economy looks solid at least through 2020.
What do we know?
First, the good news is that the general mood of employers is positive. According to the Fed, more than 75% of employers surveyed are somewhat or very optimistic about the year ahead. That’s great news and is being expressed in employment numbers: more than 75% of employers also are hiring! Not surprising, the challenge is availability of employees.
What’s particularly interesting nationally: we have been in economic recovery for over 126 months now – since June 2009. Recovery has been slower than any other recovery in recent history – indeed, economists have begun referring to this recovery track as the “New Normal” – we can’t look back to determine how future growth will behave in the future. We are in new territory. Our New Normal is characterized by this long, slow growth and significant labor shortages which have contributed to suppressing stronger growth.
And how does Minnesota look compared to national and historic trends? Minnesota is performing ahead of Wisconsin and Iowa, but still slightly slower than national economy overall. Our job growth continues to be steady and positive, though slow compared to historic averages.
The main takeaway: faster economic growth is restricted by labor shortage. Minnesota alone currently reports more than 106K job vacancies. This shortage, both in size and participation, is restricting faster growth. A key data point for us to consider is the difference in unemployment rates for white and non-white. As of November 2019:
White = 3%
Hispanic = 4.4%
Black = 6.3%
Native American = over 7%
High minority unemployment matters because they are the future workforce.
What does our economic future depend on?
Two things, primarily: 1) net migration of workers; 2) better capturing the under-employed workforce (including professionals of color, those formerly incarcerated, and those looking for/needing retraining). Data supports it, folks: our economic future depends on us doing our recruitment differently. Employers are optimistic that business continues to look good; to support that, we’ve got to figure out how to grow our workforce.
Bottom line: further growth in GDP/output are very connected to labor force growth, especially when productivity is unchanged. Our speakers offered these options to consider. We can:
Oh, and one more thing: at every Member Meeting moving forward, we’ll offer attendees an “Insider’s Perspective.” Want to know what we shared this month? sorry! You’ll have to attend next time to know! Mark your calendars for March 4th when we'll talk housing and the importance it plays in building our talent infrastructure.
President & CEO,
Saint Paul Area Chamber of Commerce