The Federal Reserve Bank of Minneapolis is expecting a growing, albeit slower, economy in the Ninth Federal Reserve District in 2008, according to the annual regional economic outlook announced today. The annual forecast includes information from the Minneapolis Fed's statistical forecasting models, results from the fedgazette's annual business conditions outlook poll of 328 district business leaders, a survey of 576 district manufacturers conducted by the Minneapolis Fed and the Minnesota Department of Employment and Economic Development, and a survey of 132 district agricultural lenders.
Employment—The outlook points to mild employment growth. Slower employment growth is expected compared to 2007 in Minnesota, Montana and South Dakota, with somewhat faster growth in North Dakota and Wisconsin. District business leaders in the service sector anticipate increasing employment; however, the construction sector expects slightly lower levels of employment. Business leaders report that labor market tightening may have reached a plateau over the past year, which is consistent with the bank's forecast that unemployment rates will remain about the same as 2007 levels.
Wages and Prices—Wage growth of 3 percent or below is anticipated throughout the district. Personal income is predicted to increase in 2008, but not as fast as in 2007, and consumer spending is expected to slow.
- Agriculture—Generally positive outlook with good field conditions and strong estimated demand and prices. Producers are concerned, though, that big increases in input costs will hurt profit growth.
- Manufacturing—District manufacturers anticipate employment growth and robust gains in sales.
- Home building—The downward trend in the housing sector is expected to continue.