Rybak, Coleman announce $41M for first-time homebuyers: Minneapolis Mayor R.T. Rybak and St. Paul Mayor Chris Coleman have announced $41 million in new funding for first-time homebuyers to purchase homes in both cities. The funding comes available through the CityLiving Program, which offers below-market interest rates on mortgages as well as downpayment and closing-cost assistance. To qualify, homebuyers’ household income cannot exceed $92,290 and the purchase price (for a single-family home) can’t be greater than $276,870. Read full story

 Ecumen adds two senior housing projects: Nonprofit senior housing provider Ecumen last week broke ground on a $27 million, 134-unit apartment complex in Apple Valley. It also has taken over management duties for a $30 million, 150-unit apartment complex being constructed in Maplewood. The pair of developments — called The Seasons at Apple Valley and The Seasons at Maplewood — strengthen Ecumen’s position in the metro area. Read full story

Dairy Queen expanding to Egypt, Macau: International Dairy Queen plans to enter two new countries in 2010, when it opens new stores in Macau, China, and in Cairo, Egypt. Edina-based Dairy Queen said it has signed franchise deals with operators in both countries. Read full story

Abbott NW gets $5M grant to expand study: Abbott Northwestern Hospital has received a $4.75 million grant from the Robina Foundation to expand a study on the use of “relatively inexpensive” employees, called care guides, to help manage chronic diseases. Minneapolis-based Abbott Northwestern has been conducting the study on 332 patients who have diabetes, hypertension or heart failure.Before the study, 33 percent of these patients weren’t meeting their clinical goals. Only six months after the project started, the percentage is down to 22 percent. Read full story

$8M+ medical office building to break ground in Blaine soon: MSP Commercial will break ground next month on a 33,000-square-foot medical office building in Blaine that’s 87 percent leased. It’s one of the few commercial real estate projects in the Twin Cities slated to start in early 2010. Total development costs are estimated at more than $8 million. Read full story

UnitedHealth launches cancer care registry:  A division of UnitedHealth Group today launched a new cancer care registry, a database that combines clinical and claims data to gauge the quality of cancer patient care. The UnitedHealthcare registry, called Oncology Care Analysis, includes data from more than 2,600 oncologists and 8,600 patients with breast, colon or lung cancer. Read full story

JAL shuns Delta, sticks with American: Japan Airlines late Monday shunned overtures to join and its SkyTeam Alliance, and will instead stick with current code-share partner Amrican Airlines. Japan Airlines was already a code-share partner with American in its oneworld alliance, but Delta wanted JAL to defect to its SkyTeam. Atlanta-based Delta got into a bidding war for a joint venture partnership with Japan’s largest airline, which filed for bankruptcy in January. Read full story

ADC earns $3.6M from continuing ops in Q1: ADC Telecommunications reported earnings from continuing operations of $3.6 million, or 4 cents per share, in the first quarter of its fiscal 2010. In the same quarter last year, ADC reported a loss of $48.4 million, or 46 cents per share, from continuing operations. Read full story

Hormel launches ad campaign for Hormel brand: Hormel Foods today launched a national advertising campaign around the Hormel brand name. The Austin, Minn.-based food manufacturer said it’s the first time in its 110-year history that the company has had a campaign emphasizing the corporate name Hormel, rather than individual products or brand lines. Read full story

Second of two articles

Arthur Rolnick, who will retire in July after 40 years at the Federal Reserve Bank of Minneapolis, believes the economic work he and his colleagues do is an important “tool to help better civilization, better the United States [and] better world economies.”

Through taking a few economics classes, “I saw how the math could help me understand the real world,” Rolnick, the Minneapolis Fed’s director of research for the past 25 years, told MinnPost. “I was always interested in public policy and I realized ... whether it was issues of poverty or business cycles or unemployment, economics had something to say about how we design public policy.”

On Monday, in the first part of his interview with MinnPost, he credited his colleagues at the Fed for raising concerns about the “Too Big to Fail” philosophy as far back as the late 1970s.

Here is the second part of an edited conversation with Rolnick, in which he also talks about the impressive return for society when it invests in early childhood education.

MinnPost: Has the public's understanding of economics changed?

Arthur Rolnick: When I started at the Fed, very few people knew anything about the Federal Reserve. Starting with ... the severe recessions in the in ’80s with interest rates up to 20 percent — and what Paul Volker [Fed chairman, 1979-87] went through to get inflation down leading to many years of healthy growth — it put us on the map. And media coverage on business expanded dramatically over this period.

While there is still a lot of misunderstanding about what the Federal Reserve does — and comments you hear from Congress reflect that — people know about the Federal Reserve. They know we’re the central bank; they have a sense that we influence interest rates and the economy. Increased awareness is a double-edged sword ... How sophisticated that knowledge is, is questionable. The Fed gets blamed for things that we have nothing to do with, what we’ve done or what our powers are.

MP: What makes economic research so interesting to you?

AR: I started out as a mathematician but was frustrated because I couldn’t see how I could use it in the real world until a mentor encouraged me to take few economics classes. I saw how the math could help me understand the real world. I was always interested in public policy and I realized ... whether it was issues of poverty or business cycles or unemployment, economics had something to say about how we design public policy. So I view economics as a tool to help better civilization, better the United States, better world economies, and it gave me a higher mission to strive for.

I came to the University of Minnesota for my Ph.D. because Walter Heller [chief economic adviser to Presidents Kennedy and Johnson] was there. Walter was a liberal Keynesian economist, very influential in the idea of using economics to influence public policy. He was also a good friend of Milton Friedman at the University of Chicago. And he’d bring Freidman in, and he would also talk about using economics to influence public policy, but from a much more conservative point of view. So I got a great education, and I’ve drawn from both sides to try to improve public policy.

MP: What will you be doing at the Humphrey Institute?

AR: Over the last eight or 10 years, I’ve gotten very interested in the economics of early childhood education. I realized economics had a lot to say about both that field.

There’s research that shows if kids are far behind in kindergarten, on average they can’t catch up,  and they are more likely to drop out. If they drop out of high school ... a high percent of those kids are not very successful in our society and a high percentage end up committing crimes, with all the problems that brings. But if you get kids ready for kindergarten, they’re much more likely to graduate from high school, get a job, pay taxes ...

The benefits are huge, not only to the child but to society. We did some calculations and found a 16 percent inflation-adjusted annual return, if you invest well in high-quality early-childhood education. That research influenced some business people to create the Minnesota Early Learning Foundation, which has raised $20 million. We’ve created a parent-awareness rating system for early-childhood ed program and opened up a pilot school in St. Paul with scholarships for at-risk kids and parents.

What I’m hoping to do at the U is raise another $15 million to $20 million to do a pilot in Minneapolis, and something similar in my hometown of Detroit. There are other cities around the country very interested in these ideas as well.

I also want to promote research in early childhood development. Neuroscientists are just scratching the surface. But they’re finding that much of brain development occurs from age zero to 3 and that environment matters. If you look at families in poverty — a teenage parent raising a kid where neglect is a big issue — we know how to fix that. We know with mentors we can make that environment much better, but we need more research. We need to know how this occurs and how best to intervene.

MP: Have you read "Freakonomics"?

AR: I haven’t read it cover to cover. I’ve read bits and pieces. I wouldn’t call it the deepest economics. There is not fundamental economic theory underlying it. But I think [co-author] Steven Levitt is very good at using basic economic principles to explain some real-world experiences that economists can explain. He always gets me thinking when I hear him talk. I think he’s a very clever, very imaginative economist.

MP: What are you reading now?

AR: My wife gave me this amazing book, written by a Bloomington cop, Richard Greelis, called “Cop Book.” It’s an incredible read. He’s a very good writer, and he gives you another side of this world, this life that you normally don’t see. And, of course, I’m interested in the economics of crime because that gets into the economics of early childhood development.

Minnesota Commerce Department seeds $5M for St. Paul energy program: The Minnesota Department of Commerce announced that it is providing $5 million to the St. Paul Port Authority to kick off a revolving-loan fund for energy-efficiency improvements in commercial and industrial buildings. The program is being funded by the American Recovery and Reinvestment Act of 2009, also known as the 2009 federal stimulus bill. Read full story

Petters sentencing scheduled March 10: Tom Petters, a former Minneapolis businessman, will be sentenced March 10 at 9:30 a.m., following his December conviction for running a $3.6 billion Ponzi scheme. The sentencing will be overseen by U.S. District Judge Richard Kyle. Read full story

Ryan and Corval announce joint venture: Ryan Cos. US Inc. and Corval Group Inc. have formed a joint venture focused on building industrial gas projects in North America. Minneapolis-based Ryan is one of the largest general contractors and developers in the state. It had about $750 million in revenue last year and has about 690 employees. Corval Group, based in St. Paul is a mechanical contractor that had about 750 employees and $150 million in annual sales Read full story

Med tech firm Disc Dynamics shutting down: A decade-old medical technology startup called Disc dynamics has closed its doors and is selling off its assets, according to reports. The Eden Prairie-based company was developing a treatment for lower back pain but never got its product approved by the U.S. Food and Drug Administration. Read full story

Target gift cards now can be mobile: Target Corp. customers will be able to save their gift-card information online, letting them use their Web-connected cell phones to pay at the cash register. The Minneapolis-based retailer today announced the launch of the Target Mobile GiftCard, which allows customers to save gift card information to a secure account on the Target.com mobile site. Read full story

New Bremer financial CEO to capitalize on strong post-recession position: Patrick Donovan has a decision to make as he takes over as CEO of Bremer Financial Corp.: where next to expand the banking company within the Upper Midwest. The St. Paul-based financial-services company — owned by both its employees and the Otto Bremer Foundation — has made it through the recession better than many of its competitors, earning $65.2 million in 2009. Donovan wants to take advantage of that. Read full story

Brookdale sheriff's sale planned for Friday: Brookdale Center in Brooklyn Center will be sold at a sheriff's auction Friday in Minneapolis at 10 a.m. according to a public notice published by Hennepin County. The mall, which is owned by Brooks Mall Properties LLC, based in Coral Gables, Fla., is being foreclosed on through a voluntary foreclosure by its lenders. Read full story

Southdale Center owner Simon reports lower revenue and income in 09: Simon Property Group, which owns Southdale Shopping Center in Edina, reported slightly less revenue and income last year, according to earnings released Friday. Unaudited consolidated statements showed net revenues falling to $3.76 billion for the fiscal year ending Dec. 31, 2009, compared with $3.78 billion the previous year. Read full story

Esten named CEO of U of M Alumni group: The University of Minnesota Alumni Association has picked associate U of M athletics director Phil Esten to be its next CEO. He will replace longtime CEO Margaret Sughrue Carlson, who announced plans to retire in May. Esten, who has a doctoral degree in kinesiology from the U of M and has taught graduate level courses in the kinesiology department, was chosen through a national search process. Read full story

First of two articles

A fixture in business and economics in the Upper Midwest for decades, Arthur J. Rolnick credits his colleagues at the Federal Reserve Bank of Minneapolis for raising concerns about the “Too Big to Fail” philosophy as far back as the late 1970s.

MinnPost caught up with him on vacation to ask him about the Minneapolis Fed’s impact on economics and public policy and his plans for the future.

Rolnick, who will retire in July after 40 years at the Minneapolis Fed (25 of them as director of research),  reflects on changes he’s seen in the Fed’s Ninth District during that time.

His replacement is Dr. Kei-Mu Yi, currently vice president and head of Monetary and Macroeconomic Research at the Federal Reserve Bank of Philadelphia, who will become senior vice president and director of research. Rolnick, a Detroit native and University of Minnesota graduate, plans to return to the U as co-director of the Human Capital Research Collaborative at the Humphrey Institute.

The Minneapolis Fed Ninth District is one of 12 Federal Reserve Bank districts in the country. It stretches 1,800 miles from east to west and encompasses 409,291 square miles, 12 percent of the county’s landmass, across six states: Minnesota, Montana, North and South Dakota, 26 counties in northwestern Wisconsin and the Upper Peninsula of Michigan. It is home to about 8.8 million people, or 3 percent of the U.S. population.

Here is the first part of MinnPost’s edited conversation with Rolnick:

MinnPost: How has the Ninth District changed in the 40 years you have been at the Fed?

Aft Rolnick: Like the country, the region has aged. We see more minorities and immigrants coming into the region. That obviously changes the culture and makeup of the workforce. The region has also become much less parochial, much more international than it was 35 or 40 years ago —  especially Minnesota. Even small businesses are doing a lot of commerce overseas, in China, Russia, India. We’re not unique in that way. The way technology has connected people around the world, the economy has become one market and the region reflects that.

MP: Has Fed research changed over that time?

AR: There’s no question the way we document the economy in the ninth district has changed due to the technological opening of borders. Research has much more recognition of international aspects of monetary policy than 40 years ago. As we speak with businesses, many with international contacts, we look at how closely related they are to the business cycle. Typically, we find the agricultural sector has its own drumbeat and the rest of the economy reflects the international business cycle.

MP: Has manufacturing become less dominant in the economy?

AR: You’ve got to be careful.  I wouldn’t say it’s much less dominant in terms of output. In terms of the number of employees, it’s down, there is no question. But in terms of the percentage of the economy, it’s down just a little. Maybe it was 20 percent of GDP; now it’s 16 or 17 percent. There are fewer workers, down — I’m guessing here — 30 to 50 percent.

But we’ve become much more productive. Manufacturing over the years has done remarkably well. We’ve outsourced the less efficient manufacturing, we do manufacturing that’s more human capital and system based. That seems to be our niche here in the U.S.

MP: What is unique about the regional economy?

AR: Minnesota has one of the most educated workforces in the country. We started developing that sometime in the ’50s. We started pouring money into education and education reform, and it’s paid off for Minnesota’s economy and for the region as a whole. It’s the reason Minnesota has been able to attract and maintain so many Fortune 500 companies. I think on a per-capita basis, we’re No. 1. And that’s because of the quality of the workforce.

Education, human capital is going to be critical for sustainable economic growth. I don’t care what country you’re in — the United States, Russia, India, China or Poland. Companies want qualified workers and they’re willing to pay. That’s how you generate high quality jobs.

MP: What impact has the Minneapolis Fed had on economic research?

AR: I would give the Minneapolis Fed a lot of credit going back to the late ’70s when we first started publishing theoretical papers about one major issue, called the “Too Big to Fail” problem. When FDR signed the FDIC (Federal Deposit Insurance Corp.] Act in 1933, he warned that government guarantees could lead to very high-risk banking. It didn’t happen because banks were heavily regulated. Then we started to deregulate the banking industry. We [at the Minneapolis Fed] had been warning, ‘Be careful! Those government guarantees could lead to very risky behavior.’ The Fed Board looked at us and said, ‘We have this under control. Don’t worry about it, guys.’ We now blame the Savings & Loan debacle on that problem ... and taxpayers paid the price in the ’80s.

We continued to write about this issue. The former president of the bank, Gary Stern and Ron Feldman, came out with a book, “Too Big to Fail,” in 2004 that warned of a potential problem.

MP: Why didn’t anyone pay attention?

AR: These ideas have been around for years. People in power knew about them ... Whether you’re talking about secretaries of treasury or heads of FDIC or even people on the Federal Reserve Board, they thought this theory was not practical, that bankers didn’t behave that way, and the theory couldn’t explain the real world. They dismissed the S&L crisis as a onetime event and they just didn’t give enough weight to the possibility that, in the extreme, we could be right. Unfortunately, we needed a debacle like this for people to realize, "Yeah, this theory turns out to be correct."

Now it’s getting a lot of attention. Washington is starting to realize “Too Big to Fail” is not just a theoretical problem. It is a real practical issue, and if we don’t do a good job of reforming the banking industry to price risk properly, we could well run into another financial debacle. The president and secretary of the Treasury are worried about this issue, and it looks like they’re going in the right direction.

I’m happy to say, from our point of view, we’ve been writing about this for over 30 years. I think it’s one of the best contributions this bank has made in the overall macro picture, in banking in particular.

Let me mention one other area ... an intellectual revolution in macro economics that began at the University of Chicago and the Minneapolis Fed ... around rational expectations. It questioned conventional economics and took into account what people expect in the future and how that affects behavior today. It changed the whole academic environment and eventually began to change public policy. That’s been another trademark of the Minneapolis Fed that’s influenced monetary policy.

It suggests, for example, that if you’re going to control inflation, you’ve got to communicate to Wall Street and the national markets that you’re committed to low inflation and put rules in place to keep long-term rates low. Most central banks today adhere to that policy.

One of our colleagues from the University of Chicago, Bob Lucas, got the Nobel Prize (for his influential work in rational expectations theory). Tom Sargent and Neil Wallace (both U of M professors and Minneapolis Fed research fellows) were working with him and will very likely get a Nobel Prize for their work eventually, plus it influenced Ed Prescott  (also U of M professor and Minneapolis Fed research fellow) who did get the Nobel Prize in ’04.

Tuesday: How the public’s understanding of economics has changed

Wells Fargo to hire 1,400 brokers this year: Wells Fargo plans to hire 1,400 brokers this year, according to Reuters. The San Francisco bank, which has a very large presence in Minnesota, plans to beef up its Wells Fargo Advisors unit by hiring 1,000 brokers from rivals and training 400 recruits new to the profession, a Wells Fargo spokeswoman told the news service. Read full story

New Twins commercial to debut during Super Bowl: The Minnesota Twins will run the newest installment of its “This Is Twins Territory” ad campaign during Sunday’s Super Bowl broadcast. The new spot, called “Minnie and Paul,” features the two characters from the Twins’ original logo, which also graces an outdoor sign at the club’s new ballpark, Target Field in downtown Minneapolis. In the ad, the two baseball players are animated and come to life to celebrate outdoor baseball. Read full story

Spring start planned for $11M armory in Arden Hills: The Minnesota Army National Guard this spring will begin constructing an $11.2 million armory-type building in Arden Hills. The 90,000-square-foot structure, called Arden Hills Army Training Readiness Center, will include an assembly hall, classrooms, distance learning center, simulation center, kitchen and physical-fitness area. The site is located on the Army-owned Twin Cities Army Ammunition Plant (TCAAP) on the Northeast quadrant of Lexington Avenue and County Road 96. Read full story

U.S. Rep. Paulsen to host job fair Monday: U.S. Rep. Erik Paulsen, R-Minn., will host a job fair in Bloomington on Monday that will include representatives from at least 50 employers. The free job fair will be at Normandale Community College’s gym in Bloomington from 1:30 to 5 p.m. Read full story

Oakdale plans to buy, redevelop failed mall: The city of Oakdale has agreed to purchase the vacant Oakdale Mall for nearly $7 million, paving the way for city officials and private developers to begin planning a mixed-use redevelopment on the site. The 180,000-square-foot shopping center, which was built in 1984, struggled with high vacancy rates. Its last 15 tenants slowly left over the past two years, and it closed for good early this year. Read full story

Dutch firm buys Multifoods parent Best Brands: Best Brands Corp. has been acquired by a Dutch food manufacturing company called CSM Bakery Supplies North America. Best Brands, a privately owned bakery ingredient and products supplier, is the parent company of the Multifoods brand. Terms of the deal were not disclosed. It is expected to close in March. Read full story

MoneyGram misses analysts' Q4 estimates: MoneyGram International reported a net loss available to common shareholders in the fourth quarter of $3.6 million, or 4 cents per share. That compares to a net gain of $18.5 million, or 23 cents per share, in the same quarter a year ago. MoneyGram’s fourth-quarter revenue was $296 million, compared with $319 million in the same period last year. Read full story

Delta traffic still down in January: Delta Air Lines reported Thursday its traffic for January dropped 5 percent, echoing recent months of declines. System traffic, including Delta and Northwest Airlines Corp. operations, fell on a 5.6 percent dip in capacity. Domestic traffic in January was down 2.7 percent, while international traffic plunged 8.3 percent. Read full story

Truckers are what move the vast majority of goods in the U.S. economy, and the current deep recession has been crippling the nation's trucking firms. The economic downturn has caused job losses of historic proportions across the United States and in Minnesota, which has recorded its lowest level of employment in the tough-to-measure sector in a decade.

“Truck transportation is the major method of moving manufactured goods,” observed John Hausladen, president of the Minnesota Trucking Association. “When we’re not making things, it stands to reason truck transportation is down.”  Although he does not have exact statistics, he acknowledges that his association membership is down and following national trends.

Nationwide, employment within the industry has declined for 35 months, resulting in the loss of 208,000 jobs, or 14.3 percent of employment making job losses during the current recession worse than at any time since the Bureau of Labor Statistics began tracking the data in 1990.

This morning’s news out of the Bureau of Labor Statistics (PDF) shows the nation’s unemployment ratedipping below 10 percent, surprising some analysts, to 9.7 percent in January, with a loss of 20,000 jobs. Not every sector of the economy fared equally, and employment continued to fall in transportation, as well as construction and warehousing while temporary help services and retail trade added jobs nationwide.

Backing up that dismal picture, the American Trucking Associations recently reported seasonally adjusted tonnage hauled by fleet truckers was down 8.3 percent for all of 2009, the largest annual drop since a 12.3 percent plunge in 1982. In one possible hopeful sign, the year ended strong with a 6.6 percent jump for the month of December, compared with December 2008, the first year-over-year increase in 15 months.

The Minnesota Department of Economic Development and Employment (DEED) reports the most recent data available for transportation and warehousing employment in Minnesota, as of June 2009, totaled 92,883, down from more than 100,000 six months earlier and the lowest monthly total recorded, going back to 2000.

And that statistic only measures individuals who work for trucking companies. “It doesn’t capture all the independent truckers,” according to John Berglund, labor market analyst for DEED. “Under Minnesota law, they are not eligible for unemployment insurance, so we don’t even see them” at DEED, Berglund said.

Minnesota had 32,839 trucking companies at the end of 2008, most of which were small independent contractors and locally owned companies, according to the MTA website. The MTA claims that in 2008, the Minnesota trucking industry provided nearly 179,000 jobs, or one of every fifteen jobs statewide. That total included not just drivers but also mechanics, accountants, data processing and safety specialists as well.

Saying he has seen some operators in the state cut their fleets anywhere from 15 to 30 percent in response to lower freight levels, Hausladen said Minnesota’s experience “on most measures is in the middle, not at either extreme when times are good or when times are bad.”

Pointing to the failure in 2008 of Monson Trucking in Duluth, as the most recent large employer to go out of business in the state, Hausladen said he “found some small independent operators were not renewing their membership, and when we tried to track them down ... they were out of business.”

He noted the plight of one company that specializes in hauling wind turbines that is sitting on “very expensive capital equipment that’s not moving.” Hausladen said truckers have to be “very adept at trying to find other freight to haul.” He contrasted the situations of a window manufacturer dependent on new construction or home remodeling with that of a food processor who will be a fairly stable source of business for truckers because “people still need to eat.”

Berglund of Minnesota DEED also believes that independent truckers got caught in a cost squeeze. “Fuel is what got them [independent truckers] ... when diesel hit $4 a gallon ... When revenue is less than expenses, you say, ‘Hmm, I think I’m going to park this thing.’ ” As a result, he sees “a lot of trucks on the highway with For Sale signs.” Berglund also believes that the squeeze on truckers “contributed to the recession ... It’s an issue many people don’t think about.”

Following the pattern of previous recessions, employment in trucking peaked in January 2007, 11 months before the official starting point of the current recession, according to the BLS, and has continuously declined since then, even though most economists believe the recession ended sometime last summer.

Presbyterian Homes’ $200M Eden Prairie project gets grant: Presbyterian Homes and Services received a grant last month from the Metropolitan Council that helps move forward a planned $200 million mixed-use project in Eden Prairie. The $848,000 grant will help pay for planning and engineering of a street realignment within the 20-acre site. St. Paul-based Presbyterian Homes is considering a development that would include 447 units of senior housing, 260 units of multifamily housing and about 70,000 square feet of retail space. Read full story

Mosaic gets naming rights for Tampa Bay Rays spring training site: The Tampa Bay Rays and The Mosaic Co. have agreed to terms for the naming rights to the team’s spring training ballpark in Charlotte County, Fla. Financial details of the deal were not disclosed. But Charlotte County will receive $75,000 annually in the deal for stadium maintenance, said Rick Vaughn, vice president of communications for the Rays. Read full story

ATK promotes DeYoung to CEO, reports strong Q3: Alliant Techsystems has appointed a new CEO and president from within its ranks of senior managers. Mark DeYoung, former head of the company’s largest business entity, the Armament Systems Group, was voted as CEO and elected to the company’s board of directors, effective immediately. Former CEO Daniel Murphy Jr. announced in Novemeber that he was retiring. Read full story

H.B. Fuller's Volpi named to Piper Jaffray board: The CEO and president of H.B. Fuller Co., Michele Volpi, has been elected to serve on Piper Jaffray’s board of directors. H.B. Fuller is a St. Paul-based sealants, paints and speciality chemical manufacturer where Volpi has been CEO since 2006. Read full story