Minn. economy still a wreck

ST. PAUL -- The bright spot for the state's economy next year may be when the federal government hires more than 8,000 workers to conduct an every-10-year-census.

State Economist Tom Stinson did not paint a pretty picture for the economy Wednesday after a economic report was released.

"The recovery will be long, slow and bumpy," Management and Budget Commissioner Tom Hanson said.

The report prepared by Stinson, Hanson and the state's financial consultant predicted that more people will lose jobs until at least early spring. Then, Stinson said, the Census Bureau will hire Minnesotans and the home construction industry should regain a bit of momentum.

Also on the upswing, if only a little, should be heavy construction such as for roads, he added.

Retail sales will continue flat, Stinson predicted, and he did not expect many businesses to build new facilities.

Stinson said economists missed the mark earlier this year. "The economy was weaker than projected."

Income tax declines show the loss of jobs, while a 4.4 percent increase in corporate taxes is misleading, he said. The increase in business income apparently is because many firms have shed workers, and thus costs, producing an increase in profits.

Gov. Tim Pawlenty did not see that as good news because production is not increasing.

"These are not particularly cheerful words," Stinson said about his Wednesday report.

Stinson said a large public works funding bill, also known as a bonding bill, could help the economy. However, he added, that would happen only if it primarily funds projects that are ready to be started in the spring. That would produce more immediate jobs.

The economist said each $100,000 in a bonding bill produces a job. However, Pawlenty emphasized that those jobs often last just a year.

Democrats appear ready to propose a $1 billion bonding bill, while Pawlenty and other Republicans favor significantly less.