Minnesota’s post-COVID-19 economic growth ranks 35th out of 50 states
Last week, the Minnesota Reformer reported that:
Data released last week by the Bureau of Economic Analysis show that Minnesota’s gross domestic product rose by about 0.7% in the second quarter, lagging well behind the national figure of 2.1%.
On the other hand, we’re doing better than Wisconsin, where GDP actually declined by 0.1%.
Analysts the Star Tribune spoke to said the state-to-state variation basically all boils down to oil and gas, as states with booming fossil fuel sectors, like Kansas and Texas, posted the biggest gains.
Quite why Wisconsin is the only state the Reformer compares us to is something of a mystery: As Figure 1 shows, the Badger State is the only one of our neighbors which we beat last quarter. Indeed, as Figure 2 shows, Minnesota’s real GDP growth was lower from Q1 to Q2 of 2023 than in 35 out of 50 states.
Figure 1:
Figure 2: Change in real GDP, 2023:Q1 to 2023:Q2, %
Source: Bureau of Economic Analysis
As we have long noted, this is not a new theme: Minnesota’s economy usually grows more slowly than that of the United States generally nowadays. In our economy reports, we have tracked Minnesota’s economic growth since 2000. The COVID-19 pandemic of 2020 represents a new starting point for comparison. How has Minnesota’s economy fared since then?
Figure 3 shows the real change in GDP for the fifty states from 2020 to the average of the last four quarters for which we have data. We see that Florida has led the way with its economic recovery from COVID-19. Minnesota’s recovery, by contrast, ranks 35th out of the 50 states.
Figure 3: Change in real GDP, 2020 to average of last four quarters
Source: Bureau of Economic Analysis
This persistent, sluggish growth represents a problem for our state. In our last report on Minnesota’s economy, written way back in 2021, we laid out a framework for thinking about economic growth at the state level. This is a subject we will return to in 2024. As the data show, it is a pressing one.