Mpls. Fed: Regional Economy in “Moderate Recovery”

Most sectors experienced gains in late 2010-with consumer spending/tourism and construction/real estate seeing particularly notable increases within Minnesota.

The regional economy has continued its “moderate recovery” in recent months, according to a report released Wednesday by the Federal Reserve Bank of Minneapolis.

Most sectors of the economy saw improvements over the last couple months of last year-with consumer spending/tourism and construction/real estate showing some of the most notable gains within Minnesota.

The just-released report is based on anecdotal information provided by executives who work in key sectors within the Federal Reserve Bank's Ninth District, which includes Minnesota, Montana, North Dakota, South Dakota, northwestern Wisconsin, and the Upper Peninsula of Michigan.

Consumer spending during the 2010 holiday season increased from the previous year, according to the Minneapolis Fed, which cited a year-over-year increase in sales activity at an unnamed Minneapolis-area mall. A Minnesota bank director similarly noted that holiday shopping began earlier this season, the report said.

The Minneapolis Fed also cited an auto dealers association within Minnesota, which reported that new vehicle sales through November were up slightly from a year ago with light trucks gaining market share relative to cars.

Winter tourism activity was up from a year ago-and sales of snowmobiles at two unnamed dealerships in central Minnesota posted year-over-year gains as early snowfalls blanketed the region, the report said. A winter ski resort within the state also reported that winter sports activity was well ahead of the previous year due to favorable weather conditions and a better economic climate.

Commercial real estate was reported to be “mostly stable,” according to commercial builders within the Twin Cities area-although some noted signs of slight increases. The Minneapolis Fed points to the fact that there were several major Twin Cities-area leasing deals announced late last year (this presumably refers to deals announced by HGA Architects and Engineers, Digital River, and Oppenheimer Wolff & Donnelly)-and a large suburban office tower was recently sold (Piedmont Office Realty Trust bought the Meridian Crossings office complex in Richfield for $65.6 million and Hines Global Real Estate Investment Trust paid $180 million for Fifth South Sixth in Minneapolis).

Other sectors of the regional economy that experienced increases in late 2010 are professional services, manufacturing, and energy and mining. The report noted that while agricultural outputs strengthened, large amounts of snow in Minnesota impeded ranchers. Labor markets, meanwhile, have continued to “strengthen modestly,” according to the report.