Published January 14, 2020. This report reflects monthly data for November 2020 and weekly data for December 2020 and January 2021.
The big picture: State restrictions enacted in late November to control surging COVID-19 case volume led to immediate impacts on the Minneapolis Saint Paul regional economy, particularly for the food and beverage service industry. Between late November and the end of the year the region experienced a backtrack of progress across several metrics, including employment, jobless claims, hotel occupancy, restaurant bookings, and small business employment. While COVID case counts have decreased from their late November peak, uncertainty abounds in early January as a new COVID-19 variant emerges in the state, vaccination distribution ramps up, and political instability distracts from economic recovery.
National Context: U.S. employment declined by 140,000 in December, the first decline since May 2020, and the unemployment rate was unchanged at 6.7%. The decline in employment reflects the recent increase in COVID-19 cases and efforts to contain the pandemic. Job losses were most significant in leisure and hospitality, with restaurants and bars accounting for two-thirds of those losses. The number of long-term unemployed (those jobless for 27 weeks or more) reached 4 million, increasing by 2.8 million since February 2020. The long-term unemployed accounted for 37.1% of total unemployment in December, the highest share witnessed during the pandemic, though not as high as what was reached during the Great Recession (46%). A federal relief package was passed in late December, meaning unemployment payments will be extended and supplemented, and small businesses will have access to a new round of Paycheck Protection Program loans.
Inclusive Recovery: The unevenness of economic recovery has been profound across the country, noticeable most recently in December U.S. unemployment trends. The unemployment rate for Hispanic workers increased in December to 9.3%, while the unemployment rate for White workers (6%), Black workers (9.9%), and Asian workers (5.9%) showed little change from November. The notable increase in Latinx unemployment in December is related to the types of jobs that are being most impacted by the pandemic, which predominately pay low wages in the service industry. Eleven percent of jobs in the accommodation and food services industry in the MSP region are filled by Latinx workers, the highest share by industry sector.
Demographics matter when it comes to risk level for long term unemployment. According to an analysis of UI claimant data by Minnesota DEED, Black Minnesotans have experienced the longest average period on unemployment insurance between March and August 2020. In addition to Black workers in the state, women, workers 65 and older, workers with a high school diploma or less, and Minnesotans with disabilities are all groups that have experienced longer times than average on unemployment insurance. Research shows that being out of work for a prolonged period is associated with lower well-being among workers, their families, and their communities.
Breaking it down: Read below for the latest glimpse into regional economic recovery with insights from metrics tracked in the Regional Recovery Hub.
HEALTH
The strongest leading indicator of economic recovery in MSP is the number of COVID-19 cases. Average daily COVID-19 cases in the 15-county metro region surged above 4,000 in November and remained high in early December. State restrictions to control the spread of the virus, particularly on in-person service at bars and restaurants, contributed to a drop in cases in late December. Average daily cases remained above 1,500 the first week of January, supporting a loosening of restrictions on business operations, but signaling that more vigilance is required to control increases in COVID-19 cases for good. While not yet tracked in the Recovery Hub, COVID-19 vaccinations surpassed 150,000 in the state of Minnesota, though distribution remains in Phase 1a (healthcare workers and people who live in long-term care facilities). the New York Times reports that 2.9% of the state population had received at least one vaccine dose, ranking Minnesota 33rd for vaccination coverage.
EMPLOYMENT
Total nonfarm employment decreased 0.6% from October to November, a decline of 11,482 net jobs. This is the first month-over-month decline in employment in the region since April 2020. The largest decline in employment was in the leisure and hospitality industry, which remained 25% below November 2019 employment levels. Initial unemployment insurance claims surpassed 10,000 a week in early December before dropping to about 7,000 a week in late December and early January. The share of claimants that are BIPOC grew from 28% the last week of November to 40% the last week of December, an indication of the disproportionate impact of workers in the leisure and hospitality industry. After 6 months of increasing job posting volume, the number of new postings dropped off in November, which is more an indication of seasonal change than the impacts of COVID-19.
TRAVEL & MOVEMENT
Measures of travel and movement stagnated in November and December as the surge in new COVID-19 cases led to a continued pause in both personal and professional social gathering. The MSP airport saw its first drop in monthly airport passenger activity in November, but remained above 1 million passengers. The hotel occupancy rate dropped to 26.8%, the lowest rate since May 2020 and 29.6 percentage points below the rate one year prior, still one of the lowest hotel occupancy rates nationwide. Employers are returning employees to downtown offices at a slow and patient pace while transit ridership experienced some weekly blips but remained nearly unchanged.
BUSINESS VITALITY
Food and beverage service business activity experienced the most severe impacts in December as a result of state restrictions. Restaurant bookings fell to zero the first two weeks of December, due to the ban on dining, before seeing a slight uptick after outdoor dining returned. Small businesses employment fell 17 percentage points below levels in January the week of Thanksgiving, due in part to the short holiday week. State loosening of restrictions allowing indoor dining up to 50% capacity went into effect on January 11th, which promises to show up in restaurant booking and small business employment metrics in mid-January. Along with federal stimulus funds being distributed to small businesses through county-appropriated relief programs and a new injection of PPP loans, we are expecting an improvement in business vitality later in January.
FAMILY VITALITY
While economic hardship and food insecurity for families continued to persist in November, the amount of food delivered by Second Harvest Heartland was the lowest amount since March 2020, though the amount of food delivered remains 31% higher than one year prior. The share of home sales that are affordable, those selling for less than $250,000, increased in December and early January above 30%. This increase in share may be influenced by a drop in sales volume due to seasonality.
LATEST RECOVERY HUB METRICS
Thank you to our contributors to the monthly summary, John Micevych of the Center for Economic Inclusion, Ryan Nunn of the Minneapolis Fed, and Julia Silvis of the Itasca Project.
Data and insights come from the Regional Recovery Hub, a digital resource with real time information for leaders on the status of the MSP region’s economic recovery. The Recovery Hub is powered by GREATER MSP, in partnership with over a dozen organizations in the MSP region. Explore the Hub at www.greatermsp.org/recovery.