The Bureau of Economic Analysis not only does headline national economic growth reports but breaks those down by state. I thought it might be interesting to look at Minnesota. Of course the Dems who have ruled the state for 16 years will tell you everything is wonderful, but the truth of course is that Minnesota is in a steep decline in all important areas of quality of life–education, infrastructure, wasted government spending, taxes of all types and so on. So it is no surprise that what the data reveals is that our economic growth sucks as well. (BEA Report)
The headline is that in terms of real GDP growth in 2025, Minnesota ranked 32nd, but even that is misleading. In the first quarter of 2026, national real GDP growth was a very robust 2.1%. But disappointingly, real Government spending contribution to GDP increased by 7.5% while private goods businesses saw 4.5% growth and private services businesses .8%. Fortunately, there was a big uptick in investment, while consumer spending growth was muted. Information was the single biggest industry contributor, as you might expect with all the AI hype. Domestic income increased on a real basis, but much of that may go to the wealthy; not clear what the impact is on the middle and lower income groups.
For Minnesota in the first quarter of 2026, real GDP grew only .3%, one of the lowest performances among all states, in fact only five states had a worse performance. Several upper Midwest states struggled, likely due to agriculture lagging, but none of those states have an economy that is supposedly as diversified as Minnesota’s is. We are far less dependent on agriculture than those states. Private industries were down by .13% in that first quarter, with notable declines in wholesaling, retailing, and warehousing. While health care and social assistance grew .38%, and are counted in private industry, they are largely funded by government, and government itself was up by .39%. So all of the economic growth in Minnesota and then some came from government and the large government supported health care and social assistance segment. There is no private economy growth in Minnesota.
Personal income growth in Minnesota appeared strong at 7% (not an after inflation or real number), but this is an illusion and you can probably guess why. Minnesota had the highest increase in personal income transfers–i.e., government handouts, in the country at 15%. How much of this was fraudulent? Net earnings, or what you got from working, only rose 5.5% and dividends and interest only 4.1%. You can do the math, there was no significant growth in any income other than government transfers. Some of this may have been payments to farmers, but that appears inconsistent across agricultural states. It is Minnesota’s overly generous welfare handouts and the new family leave law.
The bottom line is that our economic growth sucks and our personal income growth, especially after inflation and taxes, is nonexistent except for government handouts.
