Minnesota’s estimated $7.7 billion state budget surplus is a sign that “the state’s economy is emerging at a good pace,” State Management and Budget Commissioner Jim Schwalter said Tuesday during a news conference on a new fiscal forecast.
Minnesota’s economy is growing as the US economy recovers from a recession triggered by the COVID-19 pandemic last year, and the state’s economy reflects national trends, state economist Laura Kalambokidis said during the briefing.
State macroeconomic adviser HIS Markit has forecast the national economy to grow by 5.5 percent this year, slash to 4.3 percent in 2022 and average 2.7 percent over the next three years.
Minnesota’s economic growth is “in line with what we’re seeing in other states,” Kalambokidis said, although the state’s tax system is heavily dependent on income, sales and corporate taxes, to capture revenue from “extraordinary growth.” Best for.
“A better U.S. outlook for consumer spending, wage and wage growth, total employment and personal income advances our expectation that Minnesota job and 2020 wage losses will lead to positive employment and wage growth through our forecast period, Despite this there are many Minnesotans remaining in the labor force in the near term,” the forecast reads.
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Minnesota’s unemployment rate fell to 3.5 percent last month, 1.1 percentage points lower than the US rate of 4.6 percent, the report said. The unemployment rate does not capture Minnesotans who have left the labor force, including in retirement, or who have chosen to stay at home to care for children.
The state’s labor force has declined by 84,000 since March 2020. As of October, Minnesota’s labor force participation rate was 67.8 percent, 2.4 percent lower than in February 2020, but it remains 6.2 percentage points above the US rate and the fifth highest. states.
The forecast predicts Minnesota’s total wage income will increase by 8.5 percent this year, the highest year-over-year increase in income since 1998. “We expect to continue strong wage growth at 7.3 percent in 2022, 5.9 percent in 2023 and 5.1 and 4.9 percent in 2024 and 2025, respectively,” it said. are supposed to.
It forecasts that US corporate profits will grow 19 percent this year, nearly four times the rate projected at the beginning of the year.
The report projected the cost of living to rise by 4.5 percent this year and 3.3 percent in 2022, but it said addressing supply-chain issues and increased U.S. labor force participation would lead to inflation by the end of next year. expected to be slow.