fbpx

Latest Posts

Home

Facebook

Twitter

Search
About

Minnesota had the the 17th fastest growing economy in the United States in the second quarter of 2019 – But the first quarter numbers were worse than we thought

In July I wrote that Minnesota had the the 36th fastest growing economy in the United States in the first quarter of 2019. Today, the Bureau of Economic Analysis released numbers for the second quarter of 2019 and Minnesota did better. This time we matched the national average rate of real terms growth – 2.0% – and ranked 17th.

Percent Change in Real GDP by State, 2019:Q1-2019:Q2

There are some things to note, however.

Figures for Q1 were revised down

When you download these numbers from the BEA, a note at the bottom of the spreadsheet says “Last updated: November 7, 2019– revised statistics for 2014:Q1-2019:Q1; new statistics for 2019:Q2”. Writing about the Q1 figures, I said “our economy grew at 2.6% in real terms, below the national rate of 3.1%”. But those numbers have been revised. They now show that in the first quarter our economy shrank at a rate of 0.4% in real terms, well below the national rate of 3.1% growth. As a result, for the first quarter, our ranking slumps from 36th to 46th fastest ‘growing’ economy.

There is a trend here

Quarters can be volatile. Bad weather, for example, can deliver quite a blow to one quarter’s figures, something Minnesotans should be ready to take into account. But they do add up. The annual numbers average these quarterly numbers and smooth out some of this volatility.

Sadly, the picture doesn’t change too much when we look at annual numbers. Figure 2 shows real GDP growth in the United States and Minnesota since 2010. Over this period, the US economy has grown by 19.5% while Minnesota’s economy has grown by 17.2%. Interestingly, our state’s growth matched that of the United States generally from 2010, but diverged from 2014.

Figure : Real GDP growth in the US and Minnesota, 2010 to 2018, 2010 = 100

Source: Bureau of Economic Analysis

This isn’t ‘convergence’

There are those who say that this is the result of ‘convergence’, that Minnesota’s economy is growing relatively slowly because it is already relatively rich. As I’ve written before, the data does not support this.

If you are interested in finding out more about economic growth in Minnesota, its record, causes, and prospects, take a look at our report, ‘The State of Minnesota’s Economy: 2018‘.

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

Comments

Subscribe

Categories

Upcoming Events

  • Morning in Minnesota: St. Cloud

    Location: St. Cloud

    Sign up HERE! Courtyard by Marriott St. Cloud 404 West Saint Germain Street St. Cloud, MN, 56301 Please join Center of the American Experiment on Tuesday, July 21 for breakfast with Center policy fellow and education expert Catrin Wigfall as she explains K-12 education in the state and its persistent disparities despite decades of increased spending. Following her presentation, Catrin will lead a Q&A session. 7:30 AM Check In and Breakfast 8:00 AM Presentation 9:00 AM Conclude   Catrin Wigfall is a Policy Fellow at Center of the American Experiment. She is also the director of EducatedTeachersMN and EmployeeFreedomMN. Catrin’s…

    Register Now
  • Kristi Noem: The Courage to Reject a Shutdown

    Location: Online

    Sign up HERE! Join us Wednesday, July 8th for an interview with South Dakota Governor Kristi Noem over Zoom. In response to COVID-19, Noem defied the norm of a statewide shutdown and let South Dakotans choose for themselves what safety precautions to take. Tune in to this live online event to hear how Governor Noem preserved her state’s economy while still keeping citizens safe. Wednesday, July 8th at Noon CT Sign up HERE!  

    Register Now
  • Morning in Minnesota: Marshall

    Location: Marshall Golf Club

      Sign up for this event HERE! Please join Center of the American Experiment on Thursday, July 16 at Marshall Golf Club for a breakfast with Center economist, John Phelan, as he discusses Minnesota’s economic future. Following his presentation, John will lead a Q&A session. 7:30 AM Check In and Breakfast 8:00 AM Presentation 9:00 AM Conclude John Phelan is a graduate of Birkbeck College, University of London, where he earned a BSc in Economics, and of the London School of Economics where he earned an MSc. He worked in finance for ten years before becoming a professional economist. He…

    Register Now