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State's economy turning the corner

ST. PAUL -- The Minnesota economy looks good this year and still better the next two years, with spring spending expected to rise thanks to larger-than-expected federal tax refunds.

ST. PAUL -- The Minnesota economy looks good this year and still better the next two years, with spring spending expected to rise thanks to larger-than-expected federal tax refunds.

An economic report released Friday shows 89,000 more Minnesotans should have jobs in the coming years, after 50,000 jobs were lost since 2000. That will help the state's economy keep up with what is happening nationally, which shows the best growth since 1984, State Economist Tom Stinson said in releasing the report.

The first good news for Minnesota is spending should rise in the next few months as tax refunds arrive. Stinson said taxpayers did not adequately adjust their withholding amounts after last year's federal tax cuts. That means refunds will be bigger than normal.

In the longer term, the best news is jobs are being created after four years of higher unemployment figures.

The Finance Department economic report predicts job gains in the next three years will be concentrated in health care and social services. Manufacturing jobs will begin to become more plentiful, although the report indicates there still won't be as many as in the 1990s.

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Government employment is expected to fall by 6,000 as politicians at all levels find they need to cut budgets. Also on the losing side will be leisure and hospitality jobs, the report said.

The report indicates Minnesota is emerging from a recession, but wages are lower than usual when the economy recovers, Sen. Keith Langseth, DFL-Glyndon, said.

Since health-care jobs will be plentiful, Langseth argues more money should be used to fund expanding training programs for nurses at state-run colleges and universities.

Gov. Tim Pawlenty's public works bill includes too little money for such programs, Langseth said. But he plans to insert more into a Senate bill that borrows money for construction projects.

The economy varies in Langseth's district. While Clay County is doing well, Langseth said places like Traverse County hurt. Traverse is losing people to the Twin Cities, and no new jobs are being created there, he said.

Bad news from the Friday report shows most of the recent job growth happened last summer, with "no real growth" since then.

The abrupt slow-down at the end of August puzzles Stinson, and injects uncertainty into economic predictions.

Another piece of bad news is that although job numbers are expected to increase, "we are not generating enough jobs," Stinson added. Normally, Minnesota adds 30,000 jobs a year. In recent years, that number has been 10,000.

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"We've got to add 35,000 to 45,000 jobs" to employ the current jobless and people newly entering the job market, Stinson said.

Readers can reach Forum reporter Don Davis at (651) 290-0707

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