Fed economist optimistic about Minn. economy
WILLMAR -- Employment is expected to increase in Minnesota this year, and that should contribute to a healthier economy, a Federal Reserve economist said Friday.
Toby Madden, a regional economist at the Federal Reserve Bank in Minneapolis, spoke at the annual meeting of the Willmar Area Development Corporation at the Oaks at Eagle Creek.
"It's good to see the economy expanding right here in Willmar," Madden said after a few minutes of give-and-take with audience members. He stressed at the beginning of his talk that his views were his own and didn't necessarily reflect those of others at the Federal Reserve.
The economic recovery has led to the economy growing "a little bit," Madden said, so he asked the group why it wasn't growing faster. Answers covered a wide range. They included "red tape," "consumer confidence," and "red tape."
When he didn't get the answers he was looking for, Madden reminded them that, "You pretty much went through this unscathed."
Because the Willmar area wasn't as affected by the recession, he said, he didn't get the answers he was looking for about problems with credit and mortgages.
Madden talked about the "misallocation of incentives" in borrowing that had contributed to the recession.
People were purchasing homes with no down payment, and as demand went up, prices went up, he said. Many people refinanced their homes and used the larger equity to increase their standard of living. Others invested in the oversized mortgages that were destined to fail.
Madden described the recession as a house of cards that eventually collapsed.
The problem is that some of the incentives are still in place, he said, and the country is likely to see another financial crisis in the future. "There's a whole lot of debt out there that won't be paid back," he said.
Still, "there's always a crisis somewhere," Madden said. While some business owners in the room on Friday mentioned a shortage of employees as a problem, he pointed out that some other parts of the country have a shortage of jobs.
Many of those at Madden's speech said they expect the economy to be better a year from now."
After his talk, Madden talked about the outlook in the Federal Reserve's Ninth District, which includes Minnesota. "Based on our statistical model results and our survey results, we expect employment to increase in Minnesota for the year," he said. "So that's a good sign, because when you have more input such as employment, you see productivity increasing. That means more output which means more consumption and, hopefully, more happiness."
The group heard updates on the local business economy from several people.
Joanna Schrupp distributed a four-page information packet about the history, current improvements and planned expansion at the MinnWest Technology Campus. The campus currently has 21 companies operating on the site, with a total of 283 employees, she said.
Just 12 single-family homes and a total of 30 new housing units were built in Willmar last year, but that's still above the national average, reported Bruce Peterson, planning and development director for the city of Willmar. Several businesses are developing plans to build or expand in Willmar, he added.
Steve Renquist, director of the Kandiyohi County and Willmar Economic Development Commission, said west central Minnesota has the building blocks of a healthy economy. Some plans for the future include developing more of U.S. Highway 12 into a Super Two highway and doing a better job of marketing Willmar's regional airport.
State Sen. Joe Gimse, R-Willmar, honored Bob Dols for his years of work on developing a four-lane state Highway 23 from Willmar to St. Cloud. Work is currently under way for a four-lane bypass around Paynesville. Gimse is chairman of the Senate Transportation Committee.