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… But, What About Tomorrow?. Tom Stinson, State Economist Tom Gillaspy, State Demographer January 2007 2008. Last Year, We Said. Minnesota is prosperous Wise decisions made 50+ years ago made that prosperity possible Investment in education and human capital Investment in infrastructure

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But what about tomorrow

… But, What About Tomorrow?

Tom Stinson, State Economist

Tom Gillaspy, State Demographer

January 2007 2008


Last year we said
Last Year, We Said

  • Minnesota is prosperous

  • Wise decisions made 50+ years ago made that prosperity possible

    • Investment in education and human capital

    • Investment in infrastructure

    • Investment in research and innovation

  • But, … we are aging

  • Productivity is even more important

  • Wise decisions once again are needed



From 2005 to 2015 largest growth in minnesota will be in ages 55 to 69
From 2005 to 2015, Largest Growth in Minnesota Will Be in Ages 55 to 69

Source: Minnesota State Demographic Center

Numbers are rounded



New entrants to minnesota s work force plateau as baby boomers retire
New Entrants to Minnesota’s Work Force Plateau as Baby Boomers Retire

Census counts & State Demographer projection, revised 2007






… But, What About Average

Tomorrow?

Has Something Changed?



Short term state stimulus seldom makes a difference
Short Term State Stimulus Seldom Makes a Difference Fluctuations

  • Economic downturns typically are short

  • They can be over before a stimulus program is enacted

  • A recovery is likely to be underway before any additional spending occurs

  • Only a small amount of capital spending occurs in the first year



Minnesota may be losing ground
Minnesota May Be Losing Ground Fluctuations

  • Per capita income growth has fallen below the U.S. average

  • Payroll employment has grown more slowly here than elsewhere

  • Our unemployment rate has been above the U.S. average

  • Labor force participation rates have fallen

  • We show signs of slipping in education




Minnesota ranks 36 th in job growth since 2001
Minnesota Ranks 36 Fluctuationsth In Job Growth Since 2001


Past Performance Fluctuations

Does Not Ensure

Future Results



Economic fact of life 1
Economic Fact of Life #1 Fluctuations

Standard of Living depends on output per resident

Output = Output per Hour * Hours Worked


Economic fact of life 3
Economic Fact of Life #3 Fluctuations

Productivity depends on

The stock of physical capital

The stock of human capital

Education

Health status

The stock of infrastructure

Advancements in technology


Education is the key to productivity minnesota high school graduation ratio
Education Is The Key To Productivity FluctuationsMinnesota High School Graduation Ratio

2004-05 through 2005-06 graduates. Based on 10th grade enrollment three years earlier.


Academic research is a key factor in state economic growth
Academic Research Is a Key Factor in State Economic Growth Fluctuations

“the lags between R&D and economic outcomes are quite long (at least years, and more likely decades)

“The state … may do well for a while by drawing upon its existing stock of knowledge capital

“How the state of Minnesota will fare in the future … will crucially depend on its recent and future investment in R&D

*Long Gone Lake Wobegone, Pardey, Dehmer and Beddow, 2007


R d spending slowed in the early 90s we are no longer above average
R&D Spending Slowed in the Early 90s FluctuationsWe Are No Longer Above Average


Budget pressures will change more 65 than school age by 2020
Budget Pressures Will Change Fluctuations More 65+ Than School Age by 2020

Census counts & State Demographer projection, revised 2007


Minnesota has been very successful especially for a cold weather state at the end of the road
Minnesota Has Been Very Successful Fluctuations(Especially For a Cold Weather State at the End of the Road)

  • Our economic growth rate has exceeded the national average

  • Our population growth rate has led the frost belt

  • We have ranked with the leaders on many social and economic indicators

  • Wise decisions are needed for future prosperity



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