Local Economist Says COVID Recession Over in St. Cloud

(KNSI) – A Central Minnesota Economist says the COVID-19 recession in the St. Cloud area is over. The St. Cloud Quarterly Business Outlook showed consumer confidence and business confidence is high. The latest report was released last week. The report’s author, St. Cloud State University Economics Professor Rich MacDonald and SCSU Dean and Professor of Economics, King Banaian, says the recession ended months ago.

“The recession from the 2020 COVID recession ended and we actually put a date on it. We say it ended in April 2021. We’ve had pretty steady growth since.”

He says the economy continues to grow even though businesses are struggling with finding employees, increasing wages for workers, and rapidly rising prices for goods. But Banaian says those aren’t bad signs.

“We see these things, but these are usually the signs that the demand for goods and services is there. People are ready and willing to go out there willing to spend. Businesses want to work with them. Businesses want to serve them.”

He’s the biggest issue for local businesses is hiring workers. Banaian says the latest survey shows St. Cloud’s workforce has shrunk.

“In this community right now, one thing we know is there’s a reduction in the labor force since the start of the recession in February of 2020. The labor force, the number of people living in the St. Cloud area willing to go to work, is down 4.8%.”

The survey shows that the area is missing workers because of fewer college students in the area, more people retired in the last year than entered the workforce, and families can’t find childcare.

According to the latest survey, the next significant concern for local companies is inflation. Banaian says about 40% of St. Cloud area businesses fear higher prices will be permanent.

“At the rate at which these prices are going, they’ll continue to rise over the next 12 to 18 months. So, you can see businesses are beginning to make their plans on that basis. We’re still seeing 2.5% to 3% price increases. In businesses seem to be prepared for a world in which those price increases will be the price increases they can pass on as well.”

He says inflation slowed from July to August, but prices didn’t drop. The St. Cloud Quarterly Business Survey is conducted every three months by SCSU. Surveys are sent to St. Cloud area businesses asking about hiring trends, employee pay, the cost of goods, and the number of customers.

___