The big thing you should know about economic recovery in the Minneapolis Saint Paul region for the week of January 11^th.

This is the Recovery Hub Weekly Take, a new resource giving you the latest insights on regional economic recovery in the Minneapolis Saint Paul region.

This Week’s Big Thing: the fragility of progress. We knew coming into 2021 that this would be a year of economic uncertainty, but I don’t think any of us knew just how rocky of a start we’d have coming out of the gates! FDA approval of COVID-19 vaccinations in December sparked hope that the worst of the pandemic was behind us. Concerns now about the supply and speed of distribution of vaccinations paint a clearer picture that it will be many months before a large enough share of the population is vaccinated to start changing market behavior. To further complicate matters, a new variant of the virus has been detected in Minnesota (all in MSP metro counties). Five cases of the variant, originally identified in the UK, were reported in Minnesota over the weekend. MDH reported on Tuesday that this variant is faster-spreading and so we should expect an increase in cases.  On a positive note, MDH also shared Tuesday that detection of the new variant in Minnesota does not change public health recommendations, and that the current COVID-19 vaccines will be effective against the new strain.

COVID-19 case trends were already showing an uncertain path through the final weeks of 2020. 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, limiting service at bars and restaurants and event venues, contributed to a drop in cases in late December. After average daily case volume fell below 1,000 the last week of December (which likely had more to do with a drop in testing over the holiday), cases jumped back up above 1,500 the first week of January. The reduction in cases from the peaks we saw in November supported a loosening of restrictions on business operations, but more vigilance is required to control increases in COVID-19 cases for good.

On Wednesday Governor Walz extended Minnesota’s coronavirus state of emergency so that he can continue to use executive orders to direct the state’s response and control the spread of the virus. This means that the Governor could enact additional restrictions on business operations, an action that is not taken lightly by the Governor or Commissioner of DEED Steve Grove. We know through the tracking of employment, jobless claims, restaurant bookings, and small business that state restrictions have impacted labor market recovery, particularly for the food and beverage services industry.

        

Another metric we’re watching closely in the Recovery Hub is the hotel occupancy rate, which dropped to 26.8%, the lowest rate since May 2020 and 29.6 percentage points below the rate one year prior. Of the top 25 markets, the MSP metro consistently remains ranked with one of the lowest hotel occupancy rates nationwide according to data provider STR. Lower hotel occupancy in the winter months is typical in the region, but the uncertainty of when business travelers will return in 2021 makes forecasting for the year a challenge for those in the industry.