Blueprint: Recovery underway
Recovery underway, uncertainty and challenges continue
The state’s unemployment rate peaked in May at 9.9% – nearly three times higher than its pre-COVID-19 levels, but still lower than the peak rate of 14.7% in the U.S. economy. It was far below the worst predictions from March. The diversity of Minnesota’s economy helped Minnesota weather the economic storm better than many other states.
The summer months saw improving consumer confidence and economic conditions. Unemployment continued to fall, reaching 6% by September. Minnesota recovered 189,200 of the 387,800 jobs lost this spring, climbing to 93.3% of pre-COVID-19 employment levels.
Not surprisingly, the hardest hit sectors experienced the fastest recovery rates, as businesses began reopening and calling back furloughed employees. Leisure and hospitality cut its losses in half, going from 50% to 25% below 2019 levels by September of 2020. The number of small businesses open and small business revenue also improved considerably before flattening again by mid-summer.
Meanwhile, other industries like food processing, medical goods and retail reached full recovery ahead of schedule and have seen slight year-over-year job gains. This again demonstrates the value of Minnesota’s diverse economy, as strengths in one sector help offset losses in another.
Uncertainty and challenges continue
While the early months of recovery were welcomed improvements, uncertainty and concerns remain.
By late summer, the state’s economic recovery slowed and consumer activity flattened. Worse yet, the spike in COVID-19 cases in the fall and winter put the state’s recovery in jeopardy.
The continued spread of the virus produces unanswered questions for Minnesota: How will businesses in food service and hospitality fare through the cold months as activities move indoors? How long can small businesses hold on at reduced capacity? Can Minnesota contain the spread of the virus and prevent further shutdowns? Can businesses capitalize on new opportunities to grow even amidst the challenging market conditions and come out stronger on the other end? These questions and others will play a crucial role until new means to combat the virus are in effect.