2014 Economic Outlook Optimistic, but Concerns Ahead

Updated: 01/06/2014 1:03 PM KSTP.com By: Megan Stewart

Over one-third of business leaders across the Twin Cities metro are optimistic for their local economies, but will face some challenges, according to a survey by the Federal Reserve Bank of Minneapolis.

This reflects a trend across the entire Ninth District, which encompasses Minnesota, Montana, North and South Dakota, Wisconsin and Michigan, the business outlook poll said.

The outlook from the Federal Reserve calls for moderate growth in the Minnesota economy. Based on a statistical model, employment in Minnesota is expected to grow by 1.2 percent, while the unemployment rate is predicted to drop from 4.6 percent in November 2013 to 4.3 percent by the end of 2014.

Expectations of increased sales and investment for companies in 2014 is the basis for the positive outlook, the survey shows. Growth in personal income is anticipated to be 5 percent.

Retailers and manufacturers expect gains in sales, with 48 percent of all respondents planning to raise prices in 2014, according to the survey. Almost 70 percent of business leaders also saw higher productivity last year, according to the survey.

However, businesses indicated they will have to overcome some challenges in the new year. More than three-quarters of the respondents said that complying with government regulation was a challenge and 41 percent said it would be a serious challenge.

The Affordable Care Act is a concern for businesses. A majority of respondents are considering sharing more of the insurance costs with employees, according to the Federal Reserve poll.

In addition, securing workers is expected to be a challenge, with 48 percent from the Minneapolis-St. Paul area reporting difficulty.