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Economic Outlook 2006 Northeast Minnesota and Duluth Jim Skurla, Acting Director Bureau of Business and Economic Research. Brought to you by, James A. Skurla,. ACE FORECASTER. x. How is the U.S economy doing?. x. How is the U.S economy doing?. U.S. ECONOMY.

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Economic Outlook 2006

Northeast Minnesota and Duluth

Jim Skurla, Acting Director

Bureau of Business and Economic Research

Bureau of Business

and Economic Research


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Brought to you by,

James A. Skurla,

Bureau of Business

and Economic Research


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ACE

FORECASTER

Bureau of Business

and Economic Research


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x

How is the U.S economy doing?

Bureau of Business

and Economic Research


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x

How is the U.S economy doing?

Bureau of Business

and Economic Research


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U.S. ECONOMY

Bureau of Business

and Economic Research


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Prices shot up from Katrina. Crude oil prices hit highs in summer 2005.

U.S. ECONOMY

%

Source: David Lereah, chief economist for the National Realtors Association

Bureau of Business

and Economic Research


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U.S. ECONOMY summer 2005. Greenspan and the Fed’s interest rate raises . . .

Bureau of Business

and Economic Research


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U.S. ECONOMY summer 2005. . . . are putting downward pressure on housing prices

Source: David Lereah, chief economist for the National Realtors Association

Bureau of Business

and Economic Research


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SOARING ENERGY PRICES summer 2005. expected to remain high through ’06, weakening in ’07.

Source: Energy Information Administration

Bureau of Business

and Economic Research


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How is the Minnesota economy doing? summer 2005.

Bureau of Business

and Economic Research


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Demographic Projections summer 2005. U.S., MN, Duluth

U.S.

  • projected to reach 300 million this year

  • Three states — Florida, California and Texas — will account for nearly one-half of total U.S. population growth to 2030.

MN

  • State Demographer says Minnesota will have . . .

    • net in-migration from other states and countries

    • older population

Bureau of Business

and Economic Research


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Demographic Projections summer 2005. (continued)MN, Duluth

Source: Minnesota Population Projections 2000-2030,

MN State Demographer, MN Planning

Bureau of Business

and Economic Research


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Minnesota Budget Forecast 2006 summer 2005.

SURPLUS?

millions

Balance forecast for FY 2006-07. . . . . . . . . . . . . . . . . . . . . $701

Buyback to school aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $370 Required to complete buyback portion of school aid

Buyback to property tax . . . . . . . . . . . . . . . . . . . . . . . . . . . $331 Required for a partial buyback of the property tax recognition shift, reducing the recognition percentage from 48.6% to 10.8%

Still needed to complete buyback. . . . . . . . . . . . . . . . . . -$94

Source: Minnesota Dept of Finance

Bureau of Business

and Economic Research


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$ summer 2005. MN capital expenditures

$897 million total when other bonds and cash are included. 

http://www.governor.state.mn.us

Bureau of Business

and Economic Research


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Minnesota Economic Indicators summer 2005.

Source: MN Dept of Finance ;Minneapolis Fed Reserve; Star Tribune

Bureau of Business

and Economic Research


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Minnesota and U.S. Nonfarm Employment Growth summer 2005.

% Change

Source: CES data, Global Insight, and MN DEED

Bureau of Business

and Economic Research


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How is the local Duluth economy doing? summer 2005.

“The answer is blowin’ in the wind”

Bob Dylan

blowin’ in the wind?

Bureau of Business

and Economic Research


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Duluth-Superior MSA Employment summer 2005.

Booming 90s!

Source: Bureau of Labor Statistics (BLS)

Bureau of Business

and Economic Research


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Unemployment Rate summer 2005.

Source: MN DEED

Bureau of Business

and Economic Research


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Duluth-Superior MSA summer 2005.

Industry Employment 1995-2004

Source: BLS

Bureau of Business

and Economic Research


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High Growth/High Pay Industries summer 2005. Projected for Northeast Minnesota 2002-2012

employment growth higher than average

annual salary higher than median

at least 0.1% of total employment

. . . Etc.

Source: MN DEED

Bureau of Business

and Economic Research


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Region’s Top Industries summer 2005.

  • Mining

  • Wood and Paper Products

  • Shipping and Trans.

  • Health Care

  • Tourism

2006 Outlook:

Taconite output

remains steady

  • worldwide demand

  • weakening dollar

  • stable economy

  • high scrap prices

NEW Mining construction

and expansions proposed:

NorthMet

Mesabi Nugget

Mintac

Keewatin Taconite

Minorca Mine

Hibbing Taconite

United Taconite

North Shore Mining

Source: UMD BBER, Duluth News Tribune,

Bureau of Labor Statistics

Bureau of Business

and Economic Research


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Duluth’s Top Employers summer 2005.

Major Employers:

St. Mary’s/Duluth Clinic

Benedictine Health

U of M Duluth

St. Luke’s Hospital

Allete

Canadian Nat. Railway

Source: Matt Shoeppner (DEED) and Northland Connection

Bureau of Business

and Economic Research


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How’s Business in Duluth? summer 2005.

NOTABLE ACTIVITY

  • Over $190 million in construction projects either under way or just completed in Duluth

  • Cirrus Design Expansion

  • Hospital District Expansion

  • Mining on the Range impact

Source: UMD BBER and 2006

State of the City Address

Bureau of Business

and Economic Research


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Duluth Economy summer 2005. $280 Million in Unfunded Benefits to Retirees

TASK FORCE SUMMARY RECOMMENDATIONS:

Combine new health plan savings

Put $26 million a year into a health account for 30 years

Increase all utility rates 4 to 5%

Cut the city's share of retiree health costs by 20%

Source: Post Employment Health Care Benefits Task Force Final Report and Minnesota Public Radio

Bureau of Business

and Economic Research


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In short . . . summer 2005.

Most economists believe economic growth will slow to around 3% by the 2nd half of 2006

  • Higher fuel

  • Lower consumer spending

  • Slower real estate

  • Deficit drag

    However, Duluth may see jobs from mining projects on the Range, and export possibilities to China.

Bureau of Business

and Economic Research


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Follow these and other stories online with the Labovitz School’s Bureauwww.d.umn.edu/sbe/departments/bber/

Economic Impacts of PolyMet’s NorthMet Project (in progress)

Alternatives to Petroleum Based Fuels for Marine Vessels (in progress)

Economic Impact of Constructing and Operating an Integrated Gasification Power-Generation Facility on the Iron Range (pdf)

Grand Marais Harbor Expansion Impact 2005 (pdf)

Under, Over, and Mis-Matched Skills Employment in Northeast Minnesota, Including the Port Cities. March 2005, for the Minnesota Legislature, and MN DEED (pdf)

Development Enterprise Network System Analysis 2005 (pdf)

Mesaba Metals, LLC Impact Study 2003 (pdf)

Tax Revenue Impacts and Marketing Northern Minnesota’s Iron Trail 2003 (pdf)

Bureau of Business

and Economic Research


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