Mpls. Fed Optimistic About Economic Outlook for 2011
Following slow but steady economic improvement in recent months, the Federal Reserve Bank of Minneapolis said Thursday that it expects that rebound to gain more steam in 2011.
However, the Minneapolis Fed expects the rate of employment growth to increase in all areas of the region but Minnesota, where the pace will remain the same as in 2010.
The just-released forecast is for the Federal Reserve Bank's Ninth District, which includes Minnesota, Montana, North Dakota, South Dakota, northwestern Wisconsin, and the Upper Peninsula of Michigan.
The Minneapolis Fed is basing its prediction on statistical forecasting models, results from an annual poll of 408 regional business leaders, a survey of 478 regional manufacturers, and a poll of 730 chamber of commerce members.
“Optimism is back,” Toby Madden, regional economist at the Minneapolis Fed, said in a statement. “After two years of overall pessimism, businesses expect increased sales, employment, and profits. In addition to the survey results, our statistical model predicts increases in income and employment.”
According to the Minneapolis Fed, employment grew in most areas of the district in 2010 following relatively sharp decreases in 2009. Non-farm employment in particular is expected to pick up across the district in 2011, and growth in personal income is expected in Minnesota and two other states within the region. Consumer spending is also predicted to rise next year but survey respondents only forecast slight growth in wages. Unemployment rates are expected to remain at their 2010 levels.
Another of the Minneapolis Fed's findings is that the manufacturing sector is poised for growth net year. According to an annual survey of manufacturers, sales revenue, orders, employment, and capital investment all increased between 2009 and 2010-and the respondents expect even faster growth in each area next year.
Meanwhile, housing is expected to remain stagnant in 2011. Business leaders expect declines in home building across the region.