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Minnesota’s economy grew more slowly than 43 other states in the second quarter of 2017

As we write in our new report, The State of Minnesota’s Economy: 2017Minnesota’s economic growth is lagging. New data from the Bureau of Economic Analysis for the second quarter of 2017 bears this out.

Minnesota’s second quarter economic growth

Yesterday, the BEA released its figures for state GDP growth in the second quarter of 2017. As shown in Figure 1, Minnesota clocked in at a 1.2% seasonally adjusted annualized GDP growth rate. This is lower than 43 other states.

Figure 1

For the US as a whole, second quarter GDP growth was estimated as 2.8%. As Figure 2 shows, over the last year US growth has risen from 1.9% to 2.8%. In Minnesota, it has fallen from 5.8% to 1.2%.

Figure 2: Real GDP in chained dollars, % change from preceding period (annualized)

Source: Bureau of Economic Analysis

Thats the short run quarterly, what about the long run annually? 

Quarterly figures can be more volatile than annual figures. But even the annual data shows the same trend since the turn of the century. Minnesota’s economic growth has lagged the US average since 2000. Our state’s economy is now 2.5% smaller than it would have been if we had matched the national growth rate since then.

Furthermore, this is not the result of economic convergence. Minnesota is not doomed to its European growth rate by its relative affluence and North Dakota is not bound for its Chinese growth rate by virtue of its relatively lower income. This is what the economic theory of convergence might suggest. But, as I wrote last week, new research shows that convergence hasn’t been happening between high-income and low-income areas of the US over the period covered by our report.

Minnesota’s relatively slow rate of economic growth is just that; Minnesota’s. Much depends on trends at the national level, but the variations suggest that local factors play a role as well. What are these factors? How might we improve them? That is the subject of our new report, The State of Minnesota’s Economy: 2017.

John Phelan is an economist at the Center of the American Experiment. 

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