Moderate economic growth is expected for 2007 in the Ninth Federal Reserve District, according to the annual regional economic outlook announced by the Federal Reserve Bank of Minneapolis today. However, the regional economy may grow at a slower pace than in 2006.
The annual forecast includes information from the Minneapolis Fed's statistical forecasting models, results from the fedgazette's
annual business conditions outlook poll of 288 district business leaders, a survey of 475 district manufacturers conducted by the Minneapolis Fed and the Minnesota Department of Employment and Economic Development, and a survey of 121 district agricultural lenders.
—The outlook for labor markets in 2007 is positive, reflecting expectations for increased economic growth. The strongest employment growth is expected in Montana, while decreases are expected in the Upper Peninsula of Michigan. District business leaders indicate that labor markets are tightening. While many of the respondents to the poll expect to increase employment at their companies, they report difficulty finding qualified workers. Hiring in the services, retail, manufacturing and finance sectors will expand. In contrast, the construction sector anticipates decreases in employment levels. Overall, unemployment rates will stay about the same in 2007 as in 2006. Unemployment rates are anticipated to decrease slightly in Montana and North Dakota from 2006 levels, and increase slightly in the other district states.
Wages and Prices
—Wage growth of 2 percent to 3 percent is expected throughout the district. Personal income is predicted to increase, but flat consumer spending is expected. Fewer poll respondents expect to raise prices for their products and services compared with a year ago.
- Agriculture—Farmers and ranchers are cautious for the upcoming year as they face a changing marketplace.
- Manufacturing—Survey and poll respondents expect a strong 2007.
- Home building—After falling hard in 2006, home building is expected to decrease further, according to survey results, but to rebound somewhat, according to the Fed's statistical models.