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Management and Budget Co-mmissioner Tom Hanson is pi-ctured Tuesday in St. Paul at a news conference, during wh-ich officials said the economy is showing signs of life. AP Photo/Jim Mone

Economists say Minn.'s economy is starting to get on track

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ST. PAUL -- Minnesota's economy is at more of a crawl than a run but it's in at least slightly better shape than it was three months ago.

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The day state officials announced that state government's budget gap had decreased from $1.2 billion to $994 million they also indicated that the long-slumping economy likely has hit bottom and is now in the midst of a slow but sustainable recovery.

State Economist Tom Stinson on Tuesday pointed to an Employment and Economic Development Department report indicating that the state's adjusted unemployment rate dropped a 10th of a percentage point to 7.3 percent as employers added 15,600 jobs in January.

"We now think the economy is on the verge of turning up," he said. "The real issue is what's going to happen and how fast is the recovery going to proceed."

Under the expected scenario, wages will return to pre-recession levels in late 2011 with employment following in 2013.

Stinson credited federal stimulus funds with helping revive the battered economy. Without that spending, "we'd probably still be in a position where we were losing jobs big time," he said.

Programs such as cash for clunkers, Stinson said, appear to have sparked some lasting momentum for auto sales. It remains to be seen if similar momentum will result from cash for appliances, he said.

Stinson said dairy prices and agriculture as a whole should improve during the next year as long as the weather doesn't impede crop production.

Mining will pick up as long as the state and U.S. economies improve as expected, he said. Forestry and wood, however, will continue to struggle as housing construction lags, he added.

Economist Jim Skurla, director of the Bureau of Business Research at the University of Minnesota Duluth, echoed many of Stinson's thoughts. He said a strengthening Asian economy will drive increased demand for mining and that agriculture "should be fine" as well. Forestry won't see major improvements, Skurla agreed, until the housing industry bounces back.

Overall, Skurla said the economic recovery will be slow because businesses appear to be approaching hiring more cautiously than they have during previous recessions.

He agreed that the state is heading on the right economic track and that employment will slowly improve.

"That number is not going to drop very fast," Skurla said.

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