August 2013 St. Croix Valley Dashboard Released

The August 2013 edition of the St. Croix Valley Economic Dashboard has been released by the Center for Economic Research at UW-River Falls and St. Croix Economic Development Corporation. The Dashboard is a snapshot of the economic condition of the labor, consumer, and housing markets in the seven county St. Croix Valley, which includes the Wisconsin counties of Polk, St. Croix, Pierce, and Dunn and the Minnesota counties of Chisago, Ramsey, and Washington. It presents the latest available data in one convenient package (note: most regional data is available with a one or two month delay).

The Dashboard can be viewed at http://www.uwrf.edu/CenterForEconomicResearch/RegionalDashboards/SCVDB.cfm.

Dr. Logan Kelly, director of the CER, conducts research for the Dashboard and offered his observations:

What’s New

The U.S. Economy

Output: “Overall, the economic outlook is strengthening. Real GDP grew at a seasonally adjusted annual rate of 1.67%, which is slower than the 3.0% most economists think is necessary to reduce unemployment, but real consumption (growing 8.98%) was strong and capacity utilization (i.e. the fraction of overall productive capacity being used) has increased slightly. This is very encouraging for growth over the next twelve months. Fiscal austerity continues to drag on the economy, though. While 2.3 million jobs were created nation-wide over the past year, 39,000 government jobs were lost. Thus, the Philadelphia Fed’s Leading Index for the United States is forecasting only 1.25% growth over the next six months.”

Labor Market: “Nationally, the job market moved sideways in the month of July. Total nonfarm employment increased by 162,000 while the unemployment rate edged down to 7.4% according to the Bureau of Labor Statistics Employment Situation Report. The most significant job gains occurred in the Retail Trade, Food Services and Drinking Places, Financial Activities, and Wholesale Trade. Employment changed little over the month in Mining and Logging, Construction, Transportation and Warehousing, and Government. Initial claims for unemployment at the end of July were 35,000 claims lower than they were at the same time in 2012.”

National Inflation: “The Consumer Price Index (CPI), an inflationary indicator based on the average price of a fixed basket of consumer goods, remained low, show just a 2.0% increase in July from twelve months previous. Continued low CPI makes it likely that the Federal Reserve will increase interest rates or take steps to reduce the monetary base to normal levels within the next three to six months. Although none of the current inflation indicators point to near-term inflationary pressure, I expect the Federal Reserve to begin thinking about increasing interest rates before the end of the year.”

Wisconsin and Minnesota

Employment: “Wisconsin and Minnesota both saw significant job gains in the month of June, with Wisconsin gaining 17,500 jobs and Minnesota gaining 400 jobs. Nearly every sector in Wisconsin gained jobs, and the Minneapolis-St. Paul-Blooming MN-WI MSA has gained 9,000 jobs. The unemployment rate in both states remained essentially unchanged at 6.8% in Wisconsin and 5.2% in Minnesota.”

Housing Market: “The housing market is beginning to show signs of real recovery. Year-to-date home sales in Minnesota are 13.4% higher than last year, with a 13.3% increase in the median home price across the state, according to the July 2013 housing report released by the Minnesota Association of REALTORS®. Meanwhile the Wisconsin REALTORS® Association reported that the sale of existing homes in Wisconsin increased in July by 17.3% from one year previous. The median home price in Wisconsin increased by 9.0% over the past year to $155,299.”

“It’s clear that 2013 is shaping up to be a very strong year for Wisconsin housing and the indications are that these trends will continue,” said Renny Diedrich, Wisconsin REALTORS® Association board chairman.

“The Case-Shiller Home Price Index, which is a more accurate measure of overall home prices than is the median home price, also indicates a strengthening market. We have seen consistent growth, year-over-year, for much of the last six months.”

“The final, and in my opinion the most telling sign of recovery, is the 30-year mortgage rate. The weekly national average rate for 30-year fixed rate mortgages as of August 15, 2013, increase by 105 basis points (1.05 percentage points) since the beginning of May. This increase is indicative of greater demand for mortgages and may indicate a slight slackening of lending standards.”

The Valley

Regional Indicators: The regional labor market continues to strengthen slowly. Across the St. Croix Valley unemployment rates fell in all counties. The Labor Force and Employment increased, indicating a strengthening of employment conditions. The housing market continues to strengthen in a manner similar to the state and national markets. Both the median home price for the region and number of homes sold in the region increased. The Case-Shiller Home Price Index continues to indicate rising home prices, both nationally and for the Minneapolis-St. Paul-Bloomington MSA.”

About the St. Croix Valley

The Wisconsin/Minnesota St. Croix Valley is comprised of St. Croix, Polk, Pierce and Dunn counties in Wisconsin and Chisago, Ramsey and Washington counties in Minnesota. All seven counties are located at or near the Wisconsin-Minnesota border. Five of the seven counties (St. Croix, Pierce, Chisago, Ramsey and Washington) are included in the Minneapolis-St. Paul-Bloomington MN-WI metropolitan area, a 16-county region with of population of 3.3 million residents.

For additional information on the St. Croix Valley Economic Dashboard, contact Dr. Logan Kelly at cer@uwrf.edu or (715) 425-4993 or William Rubin at bill@stcroixedc.com or (715) 381-4383.