Minnesota’s Economic News — W/E 7/1/22
State and local taxes and spending CBS News: Scott Jensen seeks tax cuts to help Minnesotans cope with inflation Willmar Radio: Jensen wants to eliminate state income tax Voice of…
Earlier today the Bureau of Economic Analysis (BEA) reported the estimates for the third quarter of 2020, which is from July to September 2020. According to the new number, National GDP grew at an annual rate of 33.1%. This is in contrast to the 31.4 percent annual decline in GDP that took place in the second quarter. The BEA credits this growth to continued efforts to reopen businesses that were restricted from opening due to Covid-19.
The third quarter saw an increase in Personal Consumption Expenditures (PCE) that reflected increases in services (“led by health care as well as food services and accommodations”) and goods (“led by motor vehicles and parts as well as clothing and footwear”), as well as an increase in private inventory, investment, exports, nonresidential fixed investment, and residential fixed investments.
This is definitely better than the Economy’s performance in the second quarter. But as we have already seen the decline in unemployment slow down, there is a chance recovery will slow down in the 4th quarter. Nevertheless, there is one significant takeaway from this.
What this new data shows, more than anything else, is the fact that it is the shutdowns that have had the biggest threat to the economy, not the virus itself. It is no coincidence that the economy is growing just after states have eased their restrictions on businesses and individuals. It is safe to say that if states can steer away from imposing the draconian shutdowns that characterized the second quarter, there should not be too much worry about the economy veering off its course of recovery.
Currently, no state data exists yet on GDP for the third quarter. But it is safe to expect positive growth in GDP for Minnesota in the Third Quarter. However, as a takeaway from this data, Minnesotans should be concerned about the current restrictions that are threatening to kill the restaurant industry this winter. Covid-19 restrictions are a big killer of jobs and businesses, and they will do nothing for Minnesota’s recovery.