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Home / Government / Minneapolis Fed says construction in Upper Midwest improving (UPDATE)

Minneapolis Fed says construction in Upper Midwest improving (UPDATE)

By ?STEVE KARNOWSKI
Associated Press Writer

MINNEAPOLIS (AP) — The economy in the Upper Midwest is strengthening at a moderate pace, with gradual improvement expected to continue into next year, economists with the Federal Reserve Bank of Minneapolis said Wednesday.

In their midyear update, economists Toby Madden and Rob Grunewald said employment, consumer spending, manufacturing and home construction are up in the region, and that the Fed’s forecast models predict the trends will continue into 2011.

Their report covers the Fed’s Ninth District, which includes Minnesota, Montana, North Dakota, South Dakota, northwestern Wisconsin and Michigan’s Upper Peninsula.

Madden told reporters the district is doing “a little bit better” than some other parts of the country because the housing and financial crises aren’t as bad in the area.

In their published report, Madden and Grunewald said the economic recovery likely started in the third quarter of last year, even though it probably doesn’t seem like a recovery to the thousands of unemployed workers in district, where the unemployment rate is 7.4 percent, compared with 9.7 percent nationally.

“The economic recovery has often been characterized as one observed in data, but not on Main Street,” the economists wrote.

But the regional employment picture has improved since hitting bottom last December, they wrote. While it was down 1 percent in April compared with last year, it had been down 4 percent back in December. They project employment at the end of 2010 will be up from the end of 2009.

“However the pace of hiring will hardly seem like a flood, but certainly more than a trickle,” they wrote.

Employment levels probably won’t reach pre-recession peaks until 2013 or later, except in North Dakota, where they expect a return to peak levels by 2011 due to expanded oil drilling and the relatively healthy farm sector, the report said.

Sales of existing homes in the district were up 10 percent in the first quarter compared with the same quarter a year ago, but prices have been soft. While sale prices were higher in some cities, they were 7 percent lower in Minneapolis-St. Paul. The homebuilding sector is “no longer scraping bottom,” they wrote, but projections for the region are mixed, depending on the state.

Another bellwether of the regional economy — professional services companies such as law, accounting, architecture and engineering firms, which the Fed recently surveyed — expect an uptick over the next 12 months, the report said. After a tough year, they’re expecting modest increases in revenues, wages and benefits over the coming year, Madden said.

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