Call it a recession or whatever you want; it is touching most Minnesotans and their households.
The U.S. Labor Department’s Bureau of Economic Analysis issued a revised 2007 personal income report today showing Minnesota’s personal income gained a mere 0.8 percent last year, or the amount BEA forecasted in December.
The personal income report comes one day after the Standard & Poor’s/Case-Schiller Index showed Twin Cities home prices have fallen by about 10 percent or about the average for metropolitan areas across the country.
The December income forecast made Minnesota dead last in personal income growth among the 50 states. Today’s report confirmed the meager growth rate, but slippage elsewhere in America left Minnesota ranked 26th in the nation, or in the middle of the pack.
While the exact profile in Minnesota isn’t known, it is assumed nationwide that about 60 percent of household, or family savings, is represented by equity in homes. That equity took a big hit in 2007 and so far in 2008, while personal income growth creeps along well behind inflation. The net is lost wealth and purchasing (and borrowing) power for most Minnesotans – an economic condition that flies in the face of policy makers’ hopes for a consumer-driven economic recovery.
Prospects for better times right now don’t look promising. The Minnesota Department of Employment and Economic Development revealed on March 20 that Minnesota lost 4,100 jobs in February. Five of 11 major industries in the state recorded job losses.
Meanwhile, the housing market continues to weaken and Twin Cities media have reported that foreclosures are spreading, with bigger problems now moving to the suburbs.
Wealth, personal income, and jobs are all under stress. State and federal policy makers alike will need to monitor economic trends in the next few months to determine if, and where, targeted stimulus programs might staunch the bleeding and start the mending.