Rochester economy Ronald A. Wirtz Regional Outreach Director Past - - PowerPoint PPT Presentation

The state of the Rochester economy

Ronald A. Wirtz Regional Outreach Director Past Editor, fedgazette

minneapolisfed.org

Disclaimer

The views expressed here are the presenter's and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.

Federal Reserve System

• The central bank of the U.S. (est. 1913)
• Supervises and regulates banks
• Bank/financial holding companies (own/control 1+ banks)
• State-chartered member banks
• Foreign branches of national- and state-member banks
• State-chartered U.S. branches of foreign banks
• Offers financial services
• Manages (‘clear’) financial payments between parties
• Helps banks meet public demand for cash
• Sets monetary policy
• “Dual mandate”: Stable prices, maximum employment
• Setting interest rates via FOMC; quantitative easing
• 12 district banks nationwide track regional economies

9th District

Cleveland

Minneapolis Fed’s Ninth District

Our job is to understand this regional economy, especially its metropolitan markets

“The state of the Rochester economy”

Implied question:

Is the Rochester economy performing well, or poorly?

Answer: “Yes”

• Complex topic: Objective measures; subjective framing
• The “answer” depends on subjective choices
• performance metrics
• their relative performance (peer comparisons)
• and the timeframe chosen

You decide the state of the Rochester region based on …

• a variety of performance metrics

(not all of them economic)

• tabulated over various timeframes
• compared to similar metro regions

Similar metro regions…

• La Crosse, Wis. (pop. 134,000)
• St. Cloud, Minn. (pop. 189,000)
• Rochester, Minn. (pop. 206,000)
• Fargo, ND (pop. 209,000)
• Sioux Falls, SD (pop. 228,000)

2 4 6 8 10 12 2001 2003 2005 2007 2009 2011 2013 2015 Percent

U.S La Crosse

• St. Cloud

Rochester Sioux Falls Fargo

Source: BLS, Local Area Unemployment Statistics

Unemployment much lower in Midwest

Annual unemployment rate

100 105 110 115 120 125 130

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: Bureau of Economic Analysis

Output growth higher in Rochester ... kind of

Index of real GDP index for all industries 2001 = 100 Rochester U.S. Minnesota

Rochester output sluggish in the last decade

Index of real GDP (2004 GDP = 100)

90 100 110 120 130 140 150 160 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Fargo Sioux Falls U.S. metros La Crosse Minnesota Rochester

• St. Cloud

Source: Bureau of Economic Analysis

0% 5% 10% 15% 20% 25% 30% 35% 40% United States (metro ave.) Fargo, ND Sioux Falls, SD* St. Cloud, MN La Crosse, WI Rochester, MN* *Rochester and Sioux Falls are author estimates due to non-disclosure requirements of BEA output data Source: Bureau of Economic Analysis

Unbundling Rochester’s economic growth

Health care’s share of regional GDP

$0 $1 $2 $3 $4 $5 $6 $7 Billions

Nonhealth care Health care and educational services

Source: Bureau of Economic Analysis

Rochester's two economies

Real GDP (2009 chained dollars)

90 95 100 105 110 115 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: BLS, Quarterly Census of Employment & Wages

Employment index: Rochester speeds ahead of state

September employment of each year; Sept. 2005 = 100

Rochester Minnesota

Turning to jobs…

90 95 100 105 110 115 120 125 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Fargo Sioux Falls Rochester

• St. Cloud

La Crosse

Jobs: Rochester middle of the pack

Employment index: September 2005 = 100 Annual September total job figures

Source: BLS, Quarterly Census of Employment & Wages

• 15%
• 10%
• 5%

0% 5% 10% 15% 20% 25% 30%

Goods Services Goods Services Goods Services Goods Services Goods Services Fargo La Crosse Rochester

• St. Cloud

Sioux Falls Source: Bureau of Labor Statistics, Quarterly Census of

Rochester: Big drop in “goods” jobs

Goods = Ag & Mining, Construction, Manufacturing

Percent change in jobs, Sept. 2005 to Sept 2015

100 120 140 160 180 1990 1995 2000 2005 2010 2015

Cass County (Fargo) Minnehaha (Sioux Falls) Olmsted County (Rochester) Stearns County (St. Cloud) La Crosse County (La Crosse)

Source: U.S. Census

Demographic trends… Rochester population growth: Also the middle child

Population index: 1990 population = 100)

100 102 104 106 108 110 112 2010 2011 2012 2013 2014 2015 Fargo MSA Sioux Falls MSA United States Minnesota Rochester MSA

• St. Cloud MSA

La Crosse MSA Source: U.S. Census

More recently, a bigger separation

MSA population growth index

2010 = 100

0.25 0.5 0.75 1 1.25 1.5 1.75

1990 to 2000 2000 to 2010 2010 to 2015

Source: U.S. Census

Olmsted County population growth slowing

Compound annual population growth rate

Annual percent

100% 110% 120% 130% 140% 150% 160% 170% 180% 1990 1995 2000 2005 2010 2015 Sioux Falls Fargo

• St. Cloud

Rochester La Crosse

Labor force growth slower than most peers

1990 labor force = 100

Source: BLS, Local Area Unemployment Statistics

68 69 70 71 72 73 74 75 76 77 1992 1996 2000 2004 2008 2012 2016* * Annual measure, except 2016, which is in February Source: Bureau of Labor Statistics

Percentage of civilians 16 years old and over, either working or looking for work

MN labor force participation rate: Lower, but bottomed out?

Population & labor force trends and housing: Build it and they will come,

• r vice versa?

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

La Crosse

• St. Cloud

Rochester Sioux Falls Fargo

Source: U.S. Census

Single-family permits overall still fairly sluggish, especially in Rochester

Annual single-family building permits

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

La Crosse

• St. Cloud

Rochester Sioux Falls Fargo

Source: U.S. Census

Multi-family construction strong; never really slowed in Fargo, Sioux Falls

Annual multi-family building permits

500 1,000 1,500 2,000 2,500 3,000 3,500 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Multi-family Single-family

Rochester single family; growing multi-family

Rochester MSA pop. = 206,000

Source: U.S. Census

500 1,000 1,500 2,000 2,500 3,000 3,500 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Multi-family Single-family

Source: U.S. Census

Sioux Falls more consistent, balanced

Sioux Falls MSA pop. = 228,000

500 1,000 1,500 2,000 2,500 3,000 3,500 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Multi-family Single-family

Fargo above pre-recession levels; high levels of multi-family

Fargo MSA pop. = 206,000

Source: U.S. Census

53% 64% 65% 71% 74%

Cass County (Fargo) Minnehaha County (Sioux Falls) La Crosse County (La Crosse) Stearns County (St. Cloud) Olmsted County (Rochester) Source: U.S. Census, American Community Survey 2010-2014

Rochester: high rate of home ownership

Owner-occupied housing unit rate, 2010-2014

$700 $900 $1,100 $1,300 $1,500 $100,000 $120,000 $140,000 $160,000 $180,000 Olmsted County (Rochester) Stearns County (St. Cloud) Cass County (Fargo) La Crosse County (La Crosse) Minnehaha County (Sioux Falls)

Median value of

• wner-occupied

housing Median monthly

• wner costs

Rochester home values, median owner costs are higher

Source: U.S. Census, American Community Survey

$694 $698 $730 $741 $808

Cass County (Fargo) Minnehaha County (Sioux Falls) Stearns County (St. Cloud) La Crosse County (La Crosse) Olmsted County (Rochester) Source: U.S. Census, American Community Survey

Rochester has higher rent costs than peers

Median gross rent, 2010-2014

$49,790 $53,657 $53,755 $55,107 $55,832 $61,473 $69,430 La Crosse County (La Crosse) United States Cass Counmty (Fargo) Minnehaha County (Sioux Falls) Stearns County (St. Cloud) Minnesota Olmsted County (Rochester)

Rochester median household income the best by a large margin

Median income, 2014

Source: U.S. Census, American Community Survey

36 40.9 42.4 43.3 44.4

25 30 35 40 45 50

Rochester Sioux Falls

• St. Cloud

La Crosse Fargo

Cost-burdened renters: High incomes not translating for Rochester renters

Renters paying more than 30 percent of income for housing (2013)

Source: Harvard Joint Center for Housing Studies

It’s easy to focus the economy. Today. But over time, it’s all about the everything … Quality of place involves many factors – including (but not exclusive to) the health of the economy.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Olmsted (Rochester) Cass (Fargo) La Crosse (La Crosse) Minnehaha (Sioux Falls) Stearns (St. Cloud)

Bachelor's degree or higher Some college or associate's degree High school diploma

• nly

Less than a high school diploma

Source: U.S. Census, American Community Survey

Rochester: Top of education class

County-level education attainment 2010-2014 average

4 8 12 16 Olmsted (Rochester) Cass (Fargo) Minnesota Minnehaha (Sioux Falls) La Crosse County (La Crosse) Stearns (St. Cloud) U.S.

2004 2014

Rochester overall poverty rate lowest among peers

Percent of population in poverty

Source: U.S. Census, American Community Survey

4 8 12 16 20 24

La Crosse County (La Crosse) Cass County (Fargo) Olmsted County (Rochester) Stearns County (St. Cloud) Minnehaha County (Sioux Falls) Minnesota U.S.

2004 2014

Source: U.S. Census, American Community Survey

But Rochester’s child poverty average for Midwest metros

County-level child poverty (under 18 years old)

7.9% 9.1% 9.3% 11.1% 11.9%

Olmsted County (Rochester) Stearns County (St. Cloud) La Crosse County (La Crosse) Cass County (Fargo) Minnehaha County (Sioux Falls) Source: U.S. Census, American Community Survey

Rochester: Low uninsured population

Persons without health insurance, under age 65

15 16 18 23 34

10 20 30 40 Olmsted County/ Rochester Minnehaha County/ Sioux Falls Stearns County/

• St. Cloud

Cass County/ Fargo La Crosse County/ La Crosse

Rochester relatively higher in teen birth rate

Births to females ages 15-19, per 1,000 female teen population

Source: Minnesota Compass

24% 25% 27% 27% 28%

18 22 26 30 34 La Crosse County/ La Crosse

Rochester relatively more healthy

Percent of adults (20+) who are obese

Olmsted County/ Rochester Minnehaha County/ Sioux Falls Stearns County/

• St. Cloud

Cass County/ Fargo

Source: Minnesota Compass

177 177 197 284 285

Olmsted County/ Rochester Minnehaha County/ Sioux Falls Stearns County/

• St. Cloud

Cass County/ Fargo La Crosse County/ La Crosse

Statistics say Rochester is safer

Violent crime rate per 100,000 people

Source: Minnesota Compass

Take-aways

• Rochester regional economy is comparatively healthy
• Unemployment is low
• Very dependent on health care, which is growing, while nonhealth

care sectors are not (at least through 2014)

• Decent job growth; would likely be stronger if population & labor

force growth were stronger

• Housing growth modest, but picking up; faster-growing cities

building more multi-family than Rochester

• Labor force participation rate down, but might finally be on the rise
• Median income is high in Rochester, but median incomes in general

have been flat over time

• Other non-economy factors generally pretty favorable
• More educated
• Lower poverty and uninsured rate
• Lower obesity
• Higher teen birth rate, but lower violent crime

Looking for more? fedgazette: Ninth District economy Community Dividend: Focus on community development The Region: Monetary policy, economic theory and new research All online: minneapolisfed.org

Thank you!

Questions?

Twitter: @RonWirtz

@fedgazette @MinneapolisFed