Minnesota's February Forecast & What it Means

	Michelle Dreier

By Michelle Dreier, Director of Member Engagement & Government Affairs

The financial report released last week is good news for Minnesota’s economy. Unexpected robust GDP growth in late 2023, combined with the impacts of easing financial conditions have improved the outlook for the U.S. economy. These improvements positively impact the economic outlook for Minnesota’s economy. Consumer spending and confidence has risen since the end of 2023. While there is a forecasted deceleration of growth, it is still growth.

Unemployment is still low. Currently Minnesota’s unemployment rate is 2.9% compared to the nation’s unemployment rate of 3.7%. An unemployment rate of 4.4% is considered full employment, so if you are having a difficult time finding talent to hire, this is why. Unemployment rates less than 4.4% yield increasing wages and inflation.

Higher-than-expected collections from the corporate franchise tax drove the bulk of increased tax revenue between November and February. The higher revenue forecast raises the projected general funds surplus in FY 2024-2025 to $3.7 billion, up $1.3 billion from previous forecasts.

A structural imbalance still exists for FY 2026-2027. It’s smaller, but Minnesota is still in the red looking at future numbers.

It looks like $950 million in bonding might pass this year.

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