Twin Cities economic recovery leads Midwest

The economy of the Twin Cities has emerged from the deep recession more forcefully than any of the other major metropolitan areas in the Midwest.

Minneapolis-St. Paul's economic output grew 1.5 percent between 2008 and 2011, according to new data from the U.S. Department of Commerce, while Chicago, Detroit and most of the region's other big cities lost ground.

"We're showing improvement that's somewhat stronger than the nation as a whole," said Steve Hine, labor market economist at the Minnesota Department of Employment and Economic Development. "We've got a somewhat higher concentration of higher-skilled employment, and that's also been a source of some of our strength and would translate into more rapid GDP growth."

The data is the latest of several indicators showing that while economic growth has hardly been robust in the Twin Cities, the metro area is in better shape than most places. Unemployment in Minneapolis-St. Paul is 5.1 percent, compared with a national average of 7.9 percent.

The $207.8 billion economy of the Twin Cities (in 2011 dollars) accounts for roughly three-quarters of Minnesota's economic output. Before the downturn from 2001 to 2007, the area's economy grew at an average rate of 1.9 percent, a pace of growth to which it returned in 2011.

Of major cities from Cleveland to Kansas City, only Milwaukee and the Twin Cities clawed back the economic activity they lost in the downturn. Milwaukee's output grew 0.4 percent.

Measures of output for the Twin Cities benefit from the relatively high proportion of better paying jobs at big companies like 3M and Medtronic. For instance, if companies in each of three cities were to all add one employee, Hine said, the city where the highest-paid workers are hired will see more economic growth than the others.

But Minneapolis and St. Paul were not the fastest-growing metro area in the state in 2011. That honor goes to Mankato, with its annual output of $4.1 billion, which grew 2.3 percent in real terms in 2011.

The Mankato economy grew steadily over 2010 and 2011 because of its diversity, said Jonathan Zierdt, president of Greater Mankato Growth. The area has strong manufacturing, health care, education and agricultural sectors, and has posted job gains for 28 straight months.

"You're not adding jobs if you're not delivering products," Zierdt said. "There's a consistent stability that strategically grows on a steady basis — not big spikes."

Rochester's economy contracted in 2011, according to the data, but has grown 5.6 percent since 2008, reflecting the unwavering strength of the health care industry. Duluth and St. Cloud were flat between 2008 and 2011, with slight gains in Duluth and slight declines in St. Cloud, the data show.

In the broader region, cities in oil and gas-rich North Dakota continued to be among the top performers in the nation. Both Bismarck and Fargo — which includes Moorhead, Minn. — were in the top 25 for growth in 2011. Over the three-year period from 2008 to 2011, Bismarck's real GDP grew 14 percent.

To the south, Des Moines' metro GDP grew 6.5 percent over the three-year period, while Omaha's grew 1 percent.

Adam Belz • 612-673-4405 Twitter: @adambelz