Contact: Rosie Cataldo 612-204-5261 Date: July 24, 2000 FOR IMMEDIATE RELEASE

July fedgazette Highlights

MINNEAPOLIS—Ninth District Economic Forecast^*:

• Nonfarm Employment: For most states employment will increase in 2000, but at a slower rate than 1999, except in Wisconsin and the Upper Peninsula of Michigan, which will increase at slightly faster rates.

• Unemployment Rate: Will remain level or decrease in all states in 2000, except North Dakota, which will increase.

• Personal Income: In 2000 income growth will expand slower than the previous year in all states except Wisconsin, which will continue at the same pace.

• Housing Units Authorized: Predicted to pick up in all states in 2000, compared with 1999, including over 20 percent gains in Montana, North Dakota and South Dakota.

Featured in this issue of the fedgazette:

• Fully loaded: Despite how they might prefer to operate, development professionals offer cache of incentives to remain competitive. In the second of two fedgazette issues devoted to local economic development, District News Editor Ronald A. Wirtz explores the use of incentives for business expansion and relocation. Significant portions of the very people offering business incentives bemoan their general use, or at least their misuse, by other communities. "Local development professionals point out that theory and practice can be wildly out of sync, and the incentive game is ultimately played by street rules— namely, the highest bidder wins," Wirtz writes.

• In addition, A toolbox of favors and Backed by popular demand reveal insights from a survey of development professionals in the Ninth District regarding the use of incentives to business, and the extent of competition among communities for new and expanding businesses.

• Winning battles, rather than the war, on economic development subsidies, a column by Arthur J. Rolnick, Minneapolis Fed senior vice president and director of Research, debates the use of public subsidies for private businesses. Furthermore, it explores whether business incentives are a good way to counter-balance a poor business climate, and answers what all the "fuss" is really about.

As one of the 12 Federal Reserve Banks, the Federal Reserve Bank of Minneapolis contributes to a variety of Federal Reserve System functions, including operation of a nationwide payments system, distribution of the nation’s currency and coin, supervision and regulation of member banks and bank holding companies, and serving as a fiscal agent for the U.S. Treasury. Additionally, the president of Minneapolis Fed serves as a member of the Federal Open Market Committee, the monetary policymaking arm of the Federal Reserve’s Board of Governors.

Together with its branch in Helena, Mont., the Minneapolis Fed serves the Ninth Federal Reserve District, which includes Minnesota, Montana, North and South Dakota, 26 counties in northwestern Wisconsin and the Upper Peninsula of Michigan.

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*Forecast from national and regional models developed by researchers at the Minneapolis Fed. The models use a statistical procedure known as Bayesian vector autoregression.

Please note: The April fedgazette issue on local economic development, and others, are available on the fedgazette index.