In a recent development, Minnesota Governor Tim Walz was chosen as Vice President Kamala Harris’s running mate, bringing national attention to the state. The cultural and culinary aspects of the Upper Midwest, such as “Minnesota Goodbyes” and “Minnesota Nice,” were highlighted, along with popular dishes like tater tot hotdishes and Ju(i)cy Lucys. The state’s economic performance has become a focal point in the upcoming election, with the cost of living and job market stability being key issues.
Minnesota’s economic growth has been less than favorable in recent years, with real gross domestic product increasing by just 1.2% in 2023, ranking the state 45th nationwide. GDP growth turned negative in the first quarter of 2024, reflecting a trend seen in other surrounding states as well. Aging populations and less immigration have contributed to these challenges, affecting growth trends in the region. Migration data shows a net domestic loss in recent years, although strong international immigration has helped offset this trend.
One of the factors potentially driving people away from Minnesota is the high tax rates, with the state having the highest corporate income tax rate in the country at 9.8%. This has led to criticism of the Walz administration for increasing some personal income taxes and expanding the corporate income tax scope. However, Minnesota’s diverse economy, supported by industries like healthcare, advanced manufacturing, and retail, has been a strength for the state. The presence of Fortune 500 companies and the innovation of its skilled workforce have contributed to Minnesota’s economic success.
The labor market in Minnesota took longer than expected to recover from the pandemic, but the state’s unemployment rate remained low. Minneapolis has historically been a key driver of growth in the state, although recent years have seen smaller metro areas and rural parts experiencing more growth. The aftermath of George Floyd’s murder in 2020 had a short-term impact on the reputation of Minneapolis, but efforts to rebuild and invest in the community have continued. Governor Walz’s second term has focused on progressive policies, leveraging a state surplus to pass laws supporting free college tuition, affordable housing, and paid family leave.
Overall, the future trajectory of the Minnesota economy remains uncertain, with recent policies yet to have a measurable impact. However, the state’s commitment to inclusivity and progress in key areas like workforce development and economic opportunity signals a promising direction. With a strong foundation in diverse industries and a skilled workforce, Minnesota is poised to overcome current challenges and continue its legacy of economic success.
