Beat the virus first, then worry about the economy, Duluth business leaders told

DULUTH – Dozens of regional business leaders anxious to find a way out of the pandemic were told to hurry up and wait Tuesday morning.

"Real lasting economic recovery and growth start with controlling the virus at least until we have a vaccine," said Ron Wirtz, regional outreach director for the Federal Reserve Bank of Minneapolis. "Until that's actually rolled out we have to deal with the problems we have right now."

As Minnesota Gov. Tim Walz prepared to implement new business restrictions meant to slow the spread of COVID-19 on Tuesday, Wirtz outlined a number of concerning statistics at the twice-yearly Regional Economic Indicators Forum based in Duluth though held virtually this year.

Construction delays, a "bellwether" economic indicator, have been increasing among public and private projects in northeastern Minnesota and northwestern Wisconsin.

"We're seeing levels that are fairly concerning," Wirtz said. "They don't appear to be getting worse, but they don't appear to be getting better."

At least half the regional population is spending less than they did before the pandemic, according to a survey from the University of Wisconsin Superior, whether by choice or necessity.

And compared to other regional metro areas, Duluth is last in job growth.

Yet surveys show if all pandemic-related restrictions were lifted, "We still wouldn't see anything close to a return (to normal) if we just open up all activity," Wirtz said. "Consumer demand is lagging even with restrained capacity."

The Duluth-area housing market has been a bright spot as prices and home sales surged well into the fall. The local hospitality industry has rebounded as well, with Duluth leading the state in hotel occupancy with an average of 45% through September. Still, occupancy is 30% lower than last year, leading to a similar decline in tourism sales tax collections.

"I know there's some nervousness in getting through the winter — winter tourism is likely going to be slower," Wirtz said. "There's probably going to need to be some help."

Though the unemployment rate in the Duluth area has fallen to 6% as of September, the number of people working or looking for work has fallen to its lowest level in decades, and unemployment claims remain well above normal in the region.

Statewide, at least half of all Black and Indigenous Minnesota workers have applied for unemployment at some point during the pandemic, and Hispanic and Asian Minnesotans were also disproportionately affected by the economic downturn.

Women, veteran and minority business owners have also seen bigger drops in revenue compared to the overall picture for business owners.

Minneapolis Fed President Neel Kashkari has said another federal stimulus package is needed, and sooner rather than later, a sentiment Wirtz echoed on Tuesday.

"If we continue to see caseloads increase I don't think there's any expectation of strong growth," Wirtz said. Without a stimulus, "Many of the things we've seen in terms of recovery are going to flatten out or potentially worsen."

Brooks Johnson • 218-491-6496