Quarterly economic update released

Minnesota Management and Budget released its quarterly economic update last Friday. The information included in the document showed what many had assumed: concerns with the economy as a result of COVID-19 and the actions taken to control its spread. COVID-19 has brought a lot of uncertainty to the global market, and economic forecasts have become more tentative as a result. Forecasts indicate that the U.S. will see a contraction of 5.4% in GDP. The COVID-19 stay at home order has had a large impact, but the collapse of oil markets and the auto industry shutdown has made matters worse.

Typically, legislators have used the February forecast to develop a budget. However, the calculations for producing that forecast are flawed given the dramatic change in the realities of our current economic environment. Minnesota Management and Budget will be taking the unusual step of providing the Legislature with an updated forecast in May which will provide legislators and Governor Walz with an updated look at our budget.

Governor Walz has taken some steps to limit the impact of the forecast by reducing his senior staffs’ salary and agency commissioners by 10%. Some legislators may also start looking at agency budgets in anticipation of a poor updated forecast. As we continue to navigate this pandemic, Senate DFLers will continue to advocate for the economic security of Minnesotans across the state.