Solid outlook for regional economy
Economists are a lot like doctors. They'll never say an economy is fully healed, just that we are in recovery — even though the regional prognosis is pretty strong.
"We don't see any risk of a downturn into 2019, and not seeing much risk of a recession in the coming months," said Noah Williams, professor of economics at the University of Wisconsin Madison, at the Federal Reserve Bank of Minneapolis on Tuesday morning.
Williams was among several experts who talked on regional economic conditions across the Fed's Ninth District, which includes Minnesota, Northwestern Wisconsin, Michigan's Upper Peninsula, the Dakotas and Montana.
For Minnesota and Wisconsin the story was largely the same — there are about as many jobs as there are workers to fill them, and that's causing some wage growth though offering little room to grow the existing labor pool and boost output.
"We're in a mature expansion, but I think it's even more mature in Minnesota, and that has tightened the labor market," said Minnesota state economist Laura Kalambokidis.
Wages have risen 4.4 percent in the state in the past year, compared with 2.2 percent nationally.
In the Badger State, Williams touted the Foxconn deal as a boost to look forward to as the state anticipates "slow and steady growth" in the coming years.
"A very large fraction of the working-age population has a job," Williams said. "Challenges include low population growth, an aging workforce and net out-migration."
The Upper Peninsula faces the challenges of isolation and a lack of major employers, said Northern Michigan University economics professor Hugo Eyzaguirre, and the labor force has been declining even as it recovers in the rest of Michigan and surrounding states.
"(It's) trying to get younger people to come up with their own projects, investments, given that they cannot rely on being employed by a large company," he said.
Minnesota has managed to counter its net loss of workers to other states with immigrants from outside the U.S. joining the workforce, be it through work visas, education or refugee resettlement.
"National policies that put that at risk are a risk for our labor market," Kalambokidis said. "In addition, educational disparities and health disparities that put those communities at risk are a risk for us."
Asked about ways to boost the economy with fewer people going to work, the speakers pointed to productivity growth that could follow major investments and technological shifts.
"With a smaller numbers of workers, we need productivity growth. Can we kick that up a notch where we're providing workers with technologies and processes to keep our productivity rising?" Kalambokidis said. "That's key to wage growth as well."