Minnesota’s advantage over the United States in GDP per person has fallen from $3,237 to $43 in just six years

Last week, my colleague, Martha Njolomole, wrote that Minnesota’s Gross Domestic Product (GDP) growth in 2023 ranked 43rd in the country. This relatively poor performance wasn’t an anomaly. Indeed, as Figure 1 shows, since 2019 — the last pre-COVID year — Minnesota’s real GDP growth has ranked 36th out of the fifty states, coming in at 4.0%, less than half the national rate of 8.1%.

Figure 1: Real Gross Domestic Product growth, 2019 to 2023

Source: Bureau of Economic Analysis

But as I’ve written before, what matters from the point of view of economic welfare is GDP per capita. Sadly, here, too, Minnesota’s recent performance is relatively poor. As Figure 2 shows, between 2019 and 2023, Minnesota’s real, per capita GDP growth ranked 39th out of the fifty states. Again, with growth of 3.1%, Minnesota’s real, per capita GDP growth was less than half that of the United States, 6.6%.

Figure 2: Real per capita Gross Domestic Product growth, 2019 to 2023

Source: Bureau of Economic Analysis

Indeed, as I’ve noted before, this consistently below-average growth in GDP per capita is eroding the “premium” that Minnesota enjoys on this measure over the United States. As Figure 3 shows, as recently as 2017, real GDP per capita in Minnesota was $3,237 (or 5.4%) higher than in the United States generally. In 2023, that number was down to just $43 (or 0.1%). It is conceivable, or even likely, that in 2024, for the first time in decades, Minnesota’s per capita GDP will be below the national average.

Figure 3: Difference between real GDP per capita in Minnesota and the United States

Source: Bureau of Economic Analysis

This slowdown in per capita income growth in Minnesota relative to the United States generally is, perhaps, the gravest economic problem facing our state. We will investigate this in more depth, so watch this space.