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Survey: Regional economy grows slowly but steadily
PHOTO: NBC Chief Executive Steve Burgess welcomed guests to the first Regional Economic Indicators Forum.
Slow economic growth will continue in the United States without risk of a recession during 2014, a Federal Reserve Bank of Minneapolis official said Tuesday in Duluth. Additionally, home building is beginning to rebound, which will benefit multiple sectors of business, regional economist Toby Madden said during his keynote address at the first Regional Economic Indicators Forum sponsored by National Bank of Commerce.
The recovery, however, is uneven, said Jim Skurla, who directs UMD’s Bureau of Business and Economics Research. In this region, the rebound has been led by educational institutions, the leisure/hospitality sector and healthcare industry. Despite that growth, employment is not soaring, he said.
“People are dropping out of the labor force,” Skurla noted, adding. “If we are to grow our companies, attract companies, we need a strong labor force.”
The initial batch of regional economic indicators could not be compared with historical data, because it does not exist. One goal of the project is to develop a long term data base so comparisons within a 15-county of Northeastern Minnesota and Northwestern Wisconsin can be made in the future.
“The data will become more and more meaningful as time goes on,” said Bruce Thompson, NBC’s president of Wisconsin banks. “Exciting things are to come.”
Still, the early data can be compared with existing state and national databases. In doing so, some immediate conclusions were drawn:
• The region is experiencing slow but steady economic growth, said Calvin Wing, a UWS student who assisted with the data collection and analysis.
• An index of regionally meaningful public companies showed their return on investment has largely mirrored the average ROI for S&P 500 companies.
• The price to earnings ratio for those companies is 23.6 times earnings, which is almost exactly where it should be, said UWS student Ethan Kessler, who also assisted with the project.
“Investors are generally positive about their short term expectations,” he said.
• Most regional companies reported positive business activity during the past six months, said Sam Hoffman, a student participant from the College of St. Scholastica.
• That trend is expected to continue, although the pace may decline slightly, survey results revealed.
• Some business owners are concerned about a shortage of skilled labor.
Nationwide, the United States had record economic output during 2011, 2012 and 2013, Madden said.
“Not many people realize that we’ve had record years. It’s kind of disheartening because if people realized we’re in an economic expansion and have been for several years, we’d have even more economic activity,” he said.
But like Skurla, Madden said the recovery has not been universal. It varies by geography, by industry sector and by social class. Eighteen states are yet to experience a rebound, he said.
To read the full 200-page report, click here.
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