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We’re almost three-quarters of the way through 2014, but we just now have the first estimates of gross domestic product (GDP) for US metro areas in 2013. To be precise, the federal government compiles data on Metropolitan Statistical Areas (MSAs), which they define as “an area containing a large population nucleus and adjacent communities that have a high degree of integration with that nucleus.” There are eight MSAs totally or partially in Minnesota: Mankato, Rochester, St. Cloud, Fargo, Grand Forks, LaCrosse, Duluth and Minneapolis-St. Paul.
The new report contains data from 2001 to 2013, and here’s what I found interesting:
1. Minneapolis-St. Paul passed Detroit in GDP. Since 2008, Minneapolis-St. Paul moved up from the 14th largest MSA by GDP to 13th, changing places with Detroit. That might not seem like much, but consider that right behind Minneapolis-St. Paul is Phoenix, San Diego, San Jose and Denver. All trailed Minneapolis-St. Paul in 2008 and were still behind in 2013. And all of those areas experienced more rapid population growth than MSP, which means that productivity (output per person) grew faster in the Minneapolis-St.Paul MSA than in the others.
2. Minnesota’s MSAs did well since 2001. GDP per capita rose in every Minnesota MSA between 2001 and 2013. In particular, every metro area met or surpassed its 2007 level of income per person. This can’t be said of every American metro. For example, Naples, Florida saw it’s GDP per capita fall from $46,933 in 2001 to $39,235 in 2013 (in constant dollars), as did Colorado Springs ($41,086 to $39,377) and Atlanta ($57,832 to $52,178).
3. Fargo is booming. The metro areas that straddle the borders showed strong growth. Fargo, and to a lesser extent Grand Forks, stands out with jumps in income over the past three years. Duluth also recovered nicely from the recession while the LaCrosse area barely registered the downturn in terms of income. What’s going on in Fargo? Lots, according to a recent piece in Minnesota Business. The Bakken oil boom has certainly helped, but Fargo also benefited from strong growth in information technology (through the presence of Microsoft) and health care. The big question looming is whether this will translate into continued progress or whether incomes will stabilize at this new, higher level.
4. St. Cloud, Mankato, and Rochester aren’t. I’m a St. Cloud resident so the chart below bothered me. St. Cloud’s income per capita peaked in 2004 and steadily declined until 2010 when it started growing again. Mankato gained ground until 2006 but paralleled St. Cloud after that. Rochester’s performance is especially perplexing: after rising from 2001 to 2004, per capita GDP stagnated at an annual average growth rate of -0.17 percent from 2004 to 2013.
What’s so different about the border MSAs versus those completely within Minnesota? An obvious answer is the oil boom for Fargo and Grand Forks, but the underlying data show that natural resources and mining sector slowed growth in Fargo’s (i.e. GDP would have grown faster than it did) while it greatly boosted growth in Grand Forks (over 60 percent of growth came in natural resources.)
At the same time, natural resource industries contributed to 33 percent of St. Cloud’s growth and over 100 percent to Mankato. (How’s that possible? Other sectors such as information technology, transportation, and trade all shrank.) So, it isn’t the case that the farther into Minnesota you get the smaller the impact of the oil rush.
I’m always happy when new data show up. And this round provokes more questions than answers, but that just means we need to gather other kinds of information to understand what’s really going on with Minnesota’s economy. And that’s where the real fun begins.
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{ name: ‘La Crosse-Onalaska, WI-MN’, color: ‘#55CBDD’, data: [38993,40275,41906,41950,42598,42672,42519,43291,42775,43554,43679,43994,44940] },
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{ name: ‘Minneapolis-St. Paul-Bloomington, MN-WI’, color: ‘#C83D2D’, data: [57958,58432,60120,61455,62585,61563,61379,60709,57855,59168,60523,60878,61711] }
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{ name: ‘Rochester, MN’, color: ‘#FF6633’, data: [40523,43239,46849,47828,47147,46997,45948,45036,44038,46791,45374,46542,47080] },
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Very nice
Particularly the tie to productivity.
Ag in Fargo
Oil is making all the noise in ND but AG is still huge in ND. Case farm equipment among other things is made in Fargo.
Low Corn prices and a strong dollar
will not help the Ag sector or Ag service folks.
It may stop or reverse the price of farmland, but the cost of this years’ inputs is more than the harvest will be worth for many farmers.
Duluth/Superior
Why isn’t Duluth/Superior included in the Minnesota MSA’s?
It is
It’s included in the ‘regional’ and ‘Minnesota’ MSAs but not in the ‘border’ MSAs.
The Detroit-Minneapolis inversion makes sense if you consider their respective public sector hiring is on inverse slopes.
Private sector hiring tells another story:
“According to the new data, which everyone agrees is more reliable than the monthly numbers, Minnesota ranked 41st in the nation in private sector job growth from March 2013 to March 2014, with a growth rate of 0.8 percent.
That ranks last in the Midwest. Behind Michigan, behind Iowa, behind Illinois, and, unfortunately, behind Wisconsin.”
http://www.startribune.com/blogs/277231662.html
You’ll notice, as we did, that the downward spiral started after Governor Dayton’s tax and spend agenda took hold.
Thanks
Thomas,
Thanks for putting things into perspective. Liberals put a higher value on public sector growth which I feel stuns the growth in the private sector.
Tea Party and current “conservatives'”
extremism is based, in no small part, on their misunderstanding of macro economics.
Pawlenty, as a MN example, was fond of speaking of public fiscal matters in terms of a family sitting around a kitchen table. The concepts of scarcity and frugality were then tied to the symbolic “family finances”.
Here’s the REAL arithmetic:
GDP=Consumer Spending+Government Spending+Investment+(Exports-Imports)
70% of GDP federally, has generally been Consumer Spending, with the remaining parts based on balance of trade and domestic re-investment.
If you notice, the current typical Republican, pledging to Grover Norquist never to raise taxes, actually cripples our Treasury in its ability to stimulate economic activity and make bailouts in periods of economic crisis. Their policy proposals REDUCE every contributor to GDP!
History shows many corporations, major tech advances, and the essence of modern medicine and research have all been pioneered, maintained or advanced from government spending.
Bernanke saved us with Reserve Bank policies, but the right wing never accepted them. They waited for inflation that never came and criticized all spending at just the time our economy needed it. Europe and the rest of the world is beginning to see the need for their Central Banks to stimulate their demand with more spending, just as our recovery has done.
I recommend to our two friends here, and the Republican Party in general, who preach “smaller government” and “piggy bank” economics, to read and study some current econ thinking. Checkout http://www.pragcap.com.
Ask yourself, does that dollar in your wallet know where it came from?
You’ll find more reasons to appreciate your country and how it has recovered from so many banking crises and wars since the 19th century.
So What?
There’s nothing inherently superior or advantages about private sector hiring. They got almost no government jobs in Somalia. The mix of government and private sector jobs is simply a local economic feature.
That is because…
“they got almost no government in Somalia.”
Your comparison with a third world anarchist nation is absolutely absurd.
What’s absurd…
Magical thinking (i.e. cut taxes – shrink government… and wait for the magic to happen) is absurd. Somalia is simply the logical conclusion of magical thinking pretending to be economic theory. When magic is applied in the third world you get Bangladesh, Nigeria, and Somalia (for just a few examples). When it’s applied here we get crumbling and outdated infrastructure that’s 20 years behind the nations we’re competing with, perpetual budget crises, stagnant wages for 90% of the population, and increasingly destructive and frequent recessions.
By the way, Somalia isn’t an Anarchist nation, it’s a Libertarian nation. The main difference between Anarchists and Libertarians is that the Anarchist agenda is actually create a sustainable community and society. Libertarians ultimately classify communities as oppressive features of any social structure because they require occasional submission to the will of majorities, and personal sacrifice for the well being of the community. Anarchism may be unrealistic, but Libertarianism is ultimately incoherent.
Detroit?
I’m surprised that Detroit has hung on. They’ve lost more than half their population.