Fed outlook: Minnesota job picture good, but don't expect a fat raise

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Economists with the Federal Reserve Bank of Minneapolis are expecting moderate growth in the state's economy in 2014.

MPR News reports that involves a 1.2 percent growth in employment, with projections that Minnesota's unemployment rate will stand at 4.3 percent by the fourth quarter of this year. The Star Tribune calculated that means the state will add about 35,000 jobs this year, slightly fewer than in 2013.

The Pioneer Press noted that the Minneapolis Fed warned workers that likely won't translate into significantly bigger paychecks. Projections for the state released on Monday indicated wages for Minnesotans may go up 2 percent to 3 percent this year.

"Businesses are not generally raising wages much in order to attract workers, nor are businesses broadly expecting to offer substantial wage increases in 2014," the Fed noted in a news release.

Employment numbers will vary depending on the sector. Construction and finance-related jobs are expected to increase as part of the housing market recovery. But a contraction is forecast in service-related and retail jobs. The analysis also shows that Minnesota's labor force continues to shrink, a trend that started before the recession and continued during the downturn.

“Personal income is expected to grow faster, and the unemployment rate is expected to fall, and housing starts are expected to continue next year,” said Toby Madden, regional economist at the Minneapolis Fed.

The Star Tribune analysis suggested that greater Minnesota businesses have a more positive outlook than their metro area counterparts. About 80 percent of outstate businesses were optimistic, while 68 percent of businesses in the Twin Cities were optimistic.

The Fed also released its annual survey of businesses and manufacturers in the Fed's Ninth District, which includes much of the Upper Midwest. The forecast showed that they expect increased productivity and more sales and investment.

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