Minnesota recession: Who ya gonna trust?

Print

According to State Economist Tom Stinson, the Minnesota economy has entered into a recession. Not so, says Governor Pawlenty.

Opinion: Minnesota recession: Who ya gonna trust?

Stinson observes that “The National Bureau of Economic Research–the group that actually calls whether the U.S. is in a recession — says what they look for is an economic slump that is broad-based and of some significant duration. And what we’ve seen over the last six months in employment in Minnesota certainly qualifies.”

As reported by Minnesota Public Radio, Stinson further observed that that job losses have been broad based, cutting across many sectors of the economy, and have lasted more than six months. As quoted in the Star Tribune, Stinson observed, “We should normally add somewhere around 23,000 jobs or a little bit more just to keep up with labor market growth.” Instead, the state lost 700 jobs. Stinson concludes that if we apply national criteria to the Minnesota economy, the state has entered into a recession.

That objective measure isn’t good enough for Governor Pawlenty. While short on facts as to why he disagrees with the State Economist, Pawlenty implies that Stinson is trying to “overly scare people.” According to Pawlenty, “Tom Stinson tends to be a bit on the pessimistic side of things, to put it charitably.”

In fact, the Governor’s assessment is neither charitable nor accurate. Stinson has a reputation as a straight shooter who does not spin the numbers to make them sound better or worse than they are, despite pressure that he might receive from politicians. In short, Stinson goes where the facts lead him.

So did Minnesota 2020 readers in their responses yesterday.

Stinson received a PhD in economics from the University of Minnesota in 1973. In addition to being the State Economist–a post he has held since 1987–Stinson is a professor of applied economics at the University of Minnesota and a member of Minnesota’s Council of Economic Advisors, a non-partisan group of economists that provides expertise to lawmakers.

At the State Capitol, Stinson has a reputation among legislators of all parties as a sober, thoughtful, and unbiased professional.

Regarding the state of Minnesota’s economy, we have a choice as to whether to believe an experienced and trusted State Economist or a Governor who has been known, from time to time, to play games with the facts–“to put it charitably.”

The unvarnished facts certainly seem to support the conclusion that the state’s economy has fallen on hard times. In addition to the gloomy job loss figures:

Over the last two years (December 2005 to December 2007), Minnesota’s unemployment rate has risen by 0.7 percent and is now nearly equal to the national average. Until relatively recently, Minnesota’s unemployment rate has been significantly below the national average.

Over the last two years (December 2005 to December 2007), Minnesota’s labor force grew by 0.8 percent, less than one-third of the national average (2.5 percent). If not for the sluggish growth in the number of people seeking employment, Minnesota’s unemployment statistics would be even worse than they are.

Over the last two years (3rd quarter 2005 to 3rd quarter 2007), the national rate of growth in personal income has exceeded Minnesota’s personal income growth by 25 percent. Until relatively recently, Minnesota’s personal income growth had exceeded the national average.
In a recent article in MinnPost, Stinson notes that there is not a lot that policymakers can do in the short term to stimulate the state’s economy. However, he also argued that Minnesota’s strong economic performance over the last half-century is the result of far-sighted public and private sector leadership that made wise strategic long-term investments. Stinson also urges that public dialogue should focus “not on the question of taxes versus government spending, but rather on how we distribute the resources we have in a way that best enhances the future as well as the present.”

Tom Stinson is a wise and experienced public servant whose observations on current economic conditions and long-term trends can be ignored only at our own peril. Governor Pawlenty would be well advised not to shoot the messenger.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

This site uses Akismet to reduce spam. Learn how your comment data is processed.