Contact: Rosie Cataldo 612-204-5261 Date: December 12, 2001 FOR IMMEDIATE RELEASE

Minneapolis Fed Forecasts
Little Economic Growth in 2002

MINNEAPOLIS, Dec. 12, 2001—The Federal Reserve Bank of Minneapolis announces the regional economic outlook for 2002 at a media briefing held today at the Minneapolis Fed, 10 a.m. CDT. This forecast includes information from the Minneapolis Fed's statistical models, results from the annual business conditions outlook poll and the quarterly survey of regional agricultural lenders. The following information will be available in detail in the January 2002 issue of the fedgazette.

Economic Forecast:*

• According to the forecast model, overall employment levels will decrease in 2002. Nonfarm employment is expected to drop compared with a year earlier in Minnesota, North Dakota and the Upper Peninsula of Michigan.
  
  
• The 2002 forecast model predicts unemployment rates will rise in all states, but remain lower than historical averages in all areas except Wisconsin, where rates are projected to climb above the state's historical average.
  
  
• Personal income is forecast to decrease slightly in 2002 compared with a year earlier in Minnesota, North Dakota and South Dakota, and increase in Montana and Wisconsin, but at lower rates than historical averages.
  
  
• In 2002 housing units authorized are expected to increase faster than historical averages in all states, except South Dakota, where authorizations are forecast to decrease.

District Business Leaders Poll Results:**

Ninth District business leaders expect the national and district economy to weaken in 2002. Most of the respondents to the November business outlook poll are pessimistic about their community's economy. Leaders from the Dakotas are the most optimistic, while respondents from northwestern Wisconsin are the most negative. Results indicate modest increases in wages and prices. Most retailers expect price increases, while agriculture respondents foresee price decreases. [Results in xls format.]

Agricultural Credit Conditions Survey Results:***

Fourth quarter agricultural financial conditions declined slightly, according to the results of the Minneapolis Fed's agricultural credit survey. Farm income fell somewhat from the third quarter and significantly from the same period last year. Producers slightly reduced loan repayments and increased loan extensions. Overall, compared with the third quarter, household and capital spending decreased and the proportion of farm customers at their debt limit declined. Meanwhile, interest rates are down from last quarter, while land prices continue to increase.

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 the 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.

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

** Key findings from a poll of 323 business leaders in the Ninth Federal Reserve District, conducted in November.

*** Based on a November survey of 86 agricultural lenders in the Ninth Federal Reserve District.

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