Minnesota, Long a Bright Economic Star, Wonders What's Next

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U.S. ECONOMY
Minnesota, Long a Bright Economic Star, Wonders What’s Next
State’s unemployment is rising, and business leaders struggle to decipher the health of the economy and how it will affect companies

By Likhitha Butchireddygari and Shayndi Raice | Photographs by Jenn Ackerman for The Wall Street Journal
Updated Oct. 8, 2019 9:16 am ET

A recent uptick in Minnesota’s unemployment rate is raising the possibility that the state’s robust labor market may be faltering, and local business leaders are stumped about what comes next. ... The state’s unemployment rate was 3.3% in August, a half percentage point higher than a year earlier. While employers in the state are still struggling to find employees amid a period of low unemployment both in Minnesota and across the country, many are trying to decipher the health of the economy and how it will affect their businesses.

“Everybody is having a WTF moment,” said Bill Gray, president of Uponor North America, an Apple Valley, Minn., plumbing pipe manufacturer. Mr. Gray said he was at a charity event recently with several other chief executives who were all grumbling about how difficult it is to make plans for hiring and placing orders with such mixed messages from the labor market. ... The U.S. labor market has been a bright spot in an economy starting to experience pressure from a slowdown in manufacturing, weak global growth and uncertainties over a trade war with China. The national unemployment rate fell to 3.5% in September, a 50-year low.

Minnesota, however, is seeing a different trend, with its monthly unemployment rate rising year over year since February. Two other states, Mississippi and North Carolina, have also seen similar 0.5 percentage point increases to unemployment, but both states have much higher jobless rates, making the increases less significant. ... On a national level, rapid spikes to the unemployment rate can serve as a warning sign even if the unemployment rate is historically low, according to Ryan Nunn, policy director of the Hamilton Project at the Brookings Institution think tank.

Employment growth in Minnesota has generally followed a similar path to that of the U.S. But since 2018, the number of people with jobs has grown more slowly over the year in Minnesota than it has for the U.S. overall. Minnesota’s unemployment rate increased 0.6 percentage points in July from the previous year. Both of these trends—slowing job growth and rising unemployment in Minnesota—preceded the country’s 2008 recession.
....

Write to Likhitha Butchireddygari at [e-mail] and Shayndi Raice at [e-mail]

https://twitter.com/LikhithaBu

https://twitter.com/Shayndi

[Newest Reality]

1. Trumpslumpian Trumpcession!

Brought to you by our sponsors, the GOP!

[TheRealNorth]

2. The MN farm economy is taking a beating, as are the industries that rely or support farmers

Due to the tariffs.

[progree]

3. Nationally, the labor market isn't all it is trumped up to be, despite some who say that the

Last edited Tue Oct 8, 2019, 05:51 PM - Edit history (2)

unemployment rate (3.5%, a 50-year low) says it all.

The long-term unemployed as a percentage of the unemployed (U-3) is at levels seen in bad labor markets in the past (when one would expect it to be at levels seen in great labor markets, given the 50-year-low unemployment rate). And yes, both the long-term unemployed and the unemployed in the above sentence have looked for work in the past 4 weeks and said they wanted, and were available, for a job
https://www.democraticunderground.com/111686701

Prime age LFPR (age 25-54) is below the pre-Great Recession levels, back to 1987
https://www.democraticunderground.com/111686701#post1

https://www.bloomberg.com/news/articles/2019-02-26/powell-tells-senators-the-fed-is-finding-more-labor-market-slack

The Fed chief (Jerome Powell) pointed out that while labor force participation is improving thanks to a strong economy, it remains depressed relative to other advanced economies.

“Our ability to address this is really just a function of trying to keep us at maximum employment,” Powell said, suggesting that factors like benefit payments that discourage work, the opioid crisis, and education and skill gaps could all be factors holding participation rates back.

so it isn't just Janet Yellen talking about more slack in the labor market than the unemployment rate indicates.

Actually there have been a ton of articles and opinion pieces discussing this conundrum over the past few years, which a quick Google search will reveal.

This 10/8/19 (today) snip illustrates how confused the Fed is:

https://kstp.com/national/federal-reserve-odd-dilemma-low-unemployment-numbers-in-united-states-but-pressure-to-do-more/5518174/?cat=12678

In 2014, for example, the Fed thought the unemployment rate wouldn't be able to fall below 5.4% without accelerating inflation. So in 2017, after unemployment fell below 5%, the Fed continued a series of rate hikes in part to ward off potential high inflation.

Yet now, with the unemployment rate at 3.5%, high inflation is nowhere in sight.

"We misread the labor market," Minneapolis Fed President Neel Kashkari said earlier this year, "thinking we were at maximum employment when, in fact, millions of Americans still wanted to work."