St. Cloud Area Quarterly Business Report

Publication Title

St. Cloud Times

Document Type

Research Study

Publication Date

3-22-2020

Abstract

The St. Cloud area economic outlook is clouded by the uncertain impact of the spread of COVID-19 on the local economy.

While traditional data measures suggest overall economic fundamentals in the region remain solid, there is considerable risk of plunging into significant negative territory over the duration of the coronavirus crisis.

Much of the data analyzed in this report are from January (which is the most recently available labor market data from the Minnesota Department of Employment and Economic Development) and survey results were collected from February 20-March 13, before Gov. Walz's order to close restaurants, theaters and other leisure and hospitality businesses, so the impact of the corona-virus on the St. Cloud Area Quarterly Business Report is limited.

However, we did have the foresight to include a special question in our business survey on how the coronavirus is expected to impact area firms' business activity.

Given the exponential spread of the virus during the sample period, businesses likely were re-evaluating their outlooks between the endpoints of the survey. As a result, much of our discussion of the impact of COVID-19 on the local economy is necessarily speculative. Pandemics challenge attempts to use standard economic models to accurately forecast the length and severity of this shock.

A section composed by each of the authors on their personal views of the economic impact of the coronavirus can be found at the end of this report.

The St. Cloud Metropolitan Statistical Area (which includes Stearns and Benton counties) experienced overall employment growth of 0.5% over the 12 month period ending in January 2020.

Employment gains were largest in construction, retail trade, transportation/warehousing/utilities, financial services and other services sectors. The growth in retail employment reverses a negative pattern that had been reported over the past several months.

Annual benchmark revisions conducted by MN DEED had a significant impact on these data. The local manufacturing, information, professional & business services, education & health and leisure & hospitality sectors experienced declining employment over the past year.

The St. Cloud Index of Leading Economic Indicators was up 0.3% in the last quarter but down 0.9% over the last year. Current business activity at surveyed firms was stronger than one year ago, and the future outlook of area firms remains solid.

Nearly one-third of surveyed firms are "not at all concerned" about the impact of the spread of the coronavirus on their firm's business activity. Another 37% are only "mildly concerned." Few surveyed businesses are "greatly concerned" about the impact of the virus on their business activity.

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