State economist: Federal checks will help
MINNEAPOLIS - Federal checks meant to stimulate the economy will help, but Minnesota's state economist said Wednesday a fiscal slowdown will continue.
The checks may help the state move out of a half-year recession, Tom Stinson said, but once Minnesotans spend them the economy likely will slip again.
"We think the economy will bottom out in the fall of this year, then start a gradual growth," Stinson predicted.
Stinson appeared before the Twin Cities Agricultural Issues Round Table, saying Minnesotans are feeling the recession most in loss of jobs. An estimated 23,000 jobs were lost between June and December last year and Stinson said in an interview that the jobs will not be regained until the end of 2009.
President Bush Wednesday signed legislation to send checks of up to $1,200 to American taxpayers, Social Security recipients and disabled veterans in an effort to boost the country's economy. Stinson said checks will be sent soon enough to be noticed, but how much it helps depends upon how much of the rebates Americans spend.
An Associated Press-Ipsos poll shows that just 19 percent of Americans surveyed said they plan to spend their checks immediately after they arrive as early as May. In 2003, the last time such federal checks were issued, a third of Americans spent them within six months.
Kent Olson, a University of Minnesota agriculture economic professor, said many farmers are doing better than they have in the past, thanks to high crop prices. The stimulus package could keep that prosperity going if it influences people to keep up their level of food spending.
Also, Olson added, "it will allow them to go out to eat a little more often."
Overall, Minnesota's crop farmers are doing well, but livestock farmers continue to struggle, in part due to high crop prices.
"I am optimistic about agriculture," Olson said. "The livestock people will figure out how to adjust."
Not all rural Minnesotans are so lucky, Stinson said. The northern Minnesota-centered lumber products industry, driven in a large part by housing construction, is in a major slump. While 2,400 home building permits were issued a month in late 2005, just 800 are being issued now.
"This is a major, major decrease in activity," Stinson said.